Overview
- The Malta Financial Services Authority published a discussion paper in mid-June and is taking public responses through July 10 to shape how decentralized finance fits the EU’s Markets in Crypto-Assets rules.
- The paper says many DeFi projects keep centralized controls such as administrator keys, concentrated governance, protocol upgrade rights, and control of user interfaces that could pull them inside MiCA’s scope.
- The MFSA is seeking views on treating decentralization as a spectrum and on creating a standardized test to decide when a protocol is exempt from MiCA.
- The consultation asks whether licensed firms should be required to do smart-contract audits, governance reviews, and risk assessments before integrating DeFi services and whether new oversight roles are needed.
- The move builds on ECB research showing governance concentration in major protocols and comes as MiCA’s enforcement phase begins on July 1, increasing compliance pressure on firms and highlighting the gap between thousands of VASPs and the roughly 194 authorized providers.