Malta Seeks Public Feedback on Proposed Regulatory Framework for DeFi and DAOs

Malta Seeks Public Feedback on Proposed Regulatory Framework for DeFi and DAOs

VALLETTA, June 21: Malta’s financial regulator has launched a public consultation on a potential legal framework for decentralised finance (DeFi), including proposals to classify and regulate decentralised autonomous organisations (DAOs), as European policymakers continue exploring oversight mechanisms for blockchain-based financial services.

The Malta Financial Services Authority on June 12 released a discussion paper under the European Union’s Markets in Crypto-Assets Regulation framework and invited industry stakeholders to submit feedback by July 10.

The paper proposes a new category of “software-based organisations,” covering DAOs and certain DeFi platforms. Rather than treating DAOs as separate legal entities, the regulator suggests recognising them as organisations built around software systems, with legal obligations for the organisation distinguished from those governing the underlying protocols and code.

The MFSA noted that while MiCA generally exempts fully decentralised services from its regulatory scope, many platforms claiming decentralisation retain elements of central control. According to the regulator, such projects may still fall within regulatory oversight depending on their governance and operational structures.

Malta has been among Europe’s early movers in cryptocurrency regulation, having introduced a dedicated legal framework for digital assets in 2018.

The consultation comes amid broader international efforts to strengthen oversight of digital asset markets. Earlier this month, the New York State Department of Financial Services and the European Banking Authority signed a memorandum of understanding to coordinate supervision of cross-border stablecoin activities under MiCA.

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The agreement provides for information-sharing on stablecoin issuance, circulation volumes, holder data, market developments and potential risks, reflecting growing cooperation between regulators on digital asset oversight.

The MFSA’s proposals are part of a wider European debate on how DeFi platforms and DAOs should be governed while balancing innovation with consumer protection and financial stability. Industry feedback gathered during the consultation is expected to help shape future regulatory approaches for decentralised finance within the European Union.

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VoM News International Desk