Malta's financial regulator explores bringing parts of DeFi under MiCA's orbit
The Malta Financial Services Authority is exploring whether to bring certain decentralized finance (DeFi) protocols under the EU's MiCA regulatory framework. The regulator is seeking feedback on how to define decentralization and whether to mandate audits and risk assessments for DeFi projects.
Why it matters
This initiative represents a major step toward formalizing the legal status of DeFi, which currently exists in a regulatory grey area.
The Malta Financial Services Authority (MFSA) said that while MiCA excludes cryptocurrency services provided in a "fully decentralised manner without any intermediary," many DeFi projects retain centralized features such as administrator keys, governance concentration, protocol upgrade rights and control over user-facing interfaces, in a discussion paper published Wednesday .
The article provides a balanced overview of regulatory proposals and industry implications.
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