- The Malta Financial Services Authority (MFSA) is considering applying MiCA rules to the DeFi industry.
- Malta’s authorities plan to refine standards for DeFi governance, accountability and full decentralization, while also reviewing standardized criteria.
- DeFi remains a gray area under EU crypto regulation, and Malta’s authorities will accept comments on the discussion paper through July 10.
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Malta’s financial regulator is considering whether to bring decentralized finance, or DeFi, under the European Union’s Markets in Crypto-Assets framework, known as MiCA.
CoinDesk reported on June 18 that the Malta Financial Services Authority said in a discussion paper published June 17 that clearer standards are needed for DeFi governance, accountability and what constitutes “full decentralization.”
Under the current MiCA framework, crypto services that operate in a fully decentralized manner are exempt from regulation. The MFSA said most DeFi projects still retain centralized features, including concentrated governance and control over protocol upgrades.
The regulator is now seeking feedback on how decentralization should be categorized in more detail. It also plans to examine standardized criteria for determining whether a protocol should be excluded from MiCA.
DeFi remains a gray area under the EU’s current crypto rules. CoinDesk said that is because there is no clear standard for determining whether a platform or protocol meets the threshold for being “fully decentralized.”
The Maltese authorities will accept comments on the discussion paper through July 10.
