Malta’s financial regulator has proposed a new legal category for decentralized autonomous organizations as part of a consultation on how decentralized finance could be regulated within the European Union’s crypto framework.
According to a discussion paper published by the Malta Financial Services Authority on June 12, the regulator has opened a public consultation until July 10 seeking feedback from the industry on a possible framework for DeFi activities.
The proposal introduces the concept of “software-based organizations,” a category that would include DAOs and other blockchain-based entities governed primarily by software.
Rather than creating a separate legal framework exclusively for DAOs, the MFSA said software-based organizations could provide a legal structure that distinguishes the organization itself from the protocols and code it employs.
The regulator argued that separating these elements could help address governance and accountability issues that continue to arise in DeFi projects.
Malta is pursuing a legal structure for software-controlled entities
In the consultation document, the MFSA noted that fully decentralized services generally remain outside the scope of the European Union’s crypto asset markets regulations. At the same time, the regulator said that many projects that identify as decentralized still retain elements of centralized control, making regulatory classification more complex.
“MiCA excludes fully decentralized models from the scope of regulation, meaning projects without intermediaries or central control may not have to comply with MiCA.”
Building on Malta’s early involvement in the regulation of digital assets, including the introduction of a crypto framework in 2018, the proposal seeks to answer questions that have become more pressing as regulators investigate how DeFi systems work in practice.
Recent research has increased these concerns. In March, a European Central Bank working paper revealed that governance and decision-making across four major DeFi protocols remained concentrated among a limited group of participants.
According to the ECB document, that concentration could make it difficult for some projects to qualify as fully decentralized under MiCA.
EU supervision of DeFi anticipates MiCA enforcement
Elsewhere in Europe, policymakers continue to examine whether MiCA is adequately addressing decentralized finance. In May, the European Commission launched a targeted regulatory review and asked for feedback on several topics, including interest payments on stablecoins, DeFi activity and potential gaps that could require additional rules.
The discussion comes as EU regulators prepare for the final phase of MiCA implementation. As previously reported by crypto.news, the transition period will end on July 1, 2026, after which crypto exchanges, brokers and wallet providers will no longer be allowed to serve customers on the block without permission.
According to the European Securities and Markets Authority, companies operating without a MiCA license after the deadline would be in breach of EU law.
ESMA also said that providers that do not receive approval must establish orderly wind-down plans and help customers transfer assets to authorized firms or self-hosted wallets.
Data cited by Hogan Lovells illustrates the scale of the transition. The law firm reported that Europe had more than 3,000 virtual asset service providers in 2024, but by May 2026 only 194 authorized crypto asset service providers, including credit institutions, had received approval.
Against this backdrop, the Maltese consultation adds a new piece to the ongoing debate on how European regulators should treat organizations that operate under code, while maintaining identifiable governance structures.