The Malta regulator is proposing a new DAO category in the DeFi rulebook

Malta’s financial regulator has proposed a new legal category for established private entities as part of a consultation on how financial regulation could be regulated under 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 since July 10 seeking industry feedback on a possible framework for DeFi operations.

The proposal introduces the concept of “software-based organizations,” a category that would include DAOs and other blockchain-based organizations that are governed primarily by software.

Rather than creating a separate legal framework for DAOs alone, the MFSA said software-based organizations can provide a legal structure that separates the organization itself from protocols and running code.

The regulator argued that separating those elements could help solve the governance and accountability issues that continue to arise in all DeFi projects.

Malta wants a legal framework for software-governed organisations

Within the consultation paper, the MFSA noted that fully decentralized services generally remain outside the scope of the European Union’s Markets in Crypto-Assets regulation. At the same time, the regulator said that many projects identified as distributed still retain elements of centralized control, making the classification of control more difficult.

“MiCA does not include completely decentralized models in its regulatory framework, which means that projects without intermediaries or centralized control may not need to comply with MiCA.”

Building on Malta’s initial involvement in the regulation of digital assets, including the launch of a crypto framework in 2018, the proposal attempts to address questions that have become increasingly pressing as regulators examine how DeFi systems work in practice.

Recent research has added to that concern. In March, a working paper from the European Central Bank found that governance and decision-making in all four major DeFi protocols remained concentrated among a limited group of participants.

According to the ECB paper, that concentration could make it difficult for some projects to qualify for full classification under MiCA.

EU DeFi testing ramps up ahead of MiCA enforcement

Elsewhere in Europe, policymakers continue to review whether MiCA adequately addresses decentralized finance. In May, the European Commission launched a targeted review of the regulation and asked for feedback on several topics, including stablecoin interest payments, DeFi activity, and gaps that may require additional regulations.

The discussion comes as EU regulators prepare for the final phase of MiCA implementation. As previously reported by crypto.news, the transition period ends on July 1, 2026, after which crypto exchanges, brokers, and wallet providers without authorization will no longer be allowed to serve clients on the bloc.

According to the European Securities and Markets Authority, firms operating without a MiCA license after the deadline will be in breach of EU law.

ESMA also said that suppliers who fail to obtain accreditation should establish systematic de-escalation programs and help clients transfer assets to accredited firms or private funds.

The data cited by Hogan Lovells shows the scale of the change. The law firm reported that Europe has more than 3,000 virtual asset service providers by 2024, but only 194 authorized crypto-asset service providers, including credit institutions, have received approval by May 2026.

On the contrary, the Malta consultation adds another chapter to the ongoing debate on how European regulators should manage code-based organizations while maintaining tangible governance structures.