Malta’s Financial Regulator Explores Regulating Part of DeFi Under the MiCA Framework

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Malta’s Financial Services Authority (MFSA) has published a discussion paper on integrating DeFi into the MiCA (EU Markets in Crypto-Assets Regulation) framework. The paper observes that while MiCA currently excludes “fully decentralized” services, many DeFi projects include centralized elements such as admin keys and governance control. The regulator is seeking public input on treating decentralization as a spectrum and proposes a compliance framework to determine whether protocols should be subject to MiCA. Possible structures such as DAOs and automated compliance tools are also examined. The consultation closes on July 10.

Huo Xing Finance reports, according to CoinDesk, that the Malta Financial Services Authority (MFSA) has released a discussion paper exploring how decentralized finance (DeFi) could be integrated into the EU’s MiCA framework. The MFSA notes that while MiCA exempts “fully decentralized” crypto services, many DeFi projects still retain centralized features such as administrator private keys, centralized governance, and protocol upgrade permissions. The regulator is seeking public input on whether decentralization should be viewed as a spectrum rather than a binary concept, and whether a standardized framework should be established to determine whether a protocol falls outside MiCA’s regulatory scope. Additionally, the paper examines potential legal structures such as DAOs and segregated unit companies, and investigates automated compliance mechanisms like custodial agents. The public consultation period for this discussion paper ends on July 10.

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