Malta Financial Services Authority (MFSA) has announced a proposal to create a new legal classification for decentralized autonomous organizations (DAOs) as part of its ongoing effort to shape DeFi regulation under the EU’s crypto framework.
Proposed Legal Structure
The MFSA’s discussion paper, released on June 12, introduces the term “software‑based organizations” to encompass DAOs and other blockchain entities that operate primarily through code. By distinguishing the legal entity from the underlying protocols, the regulator aims to clarify governance responsibilities and improve accountability for projects that blend decentralized and centralized features.
Public Consultation Timeline
Stakeholders can submit feedback on the draft framework until July 10, during a public consultation that targets developers, investors, and market participants. The MFSA emphasizes that the consultation will help refine the approach before any formal legislation is introduced.
Implications for DeFi and Investors
According to the MFSA, fully decentralized services typically fall outside the scope of the EU’s Markets in Crypto‑Assets (MiCA) regulation, yet many so‑called decentralized projects retain centralized control, complicating their regulatory classification. By offering a dedicated legal pathway for software‑governed entities, the authority hopes to provide clearer protection for crypto investors and foster a more stable market environment.