MFSA seeks input on viewing decentralization as a spectrum rather than a binary concept.
By Jamie Crawley, AI Boost|Edited by Omkar Godbole Jun 18, 2026, 10:43 a.m. 1 min readMake preferred on ShareShare this articleCopy linkX (Twitter)LinkedInFacebookEmailMake preferred on (Shutterstock)SummaryShow- The financial authority of Malta is investigating how decentralized finance (DeFi) can be incorporated into the EU's MiCA regulations.
- The MFSA noted that numerous DeFi projects exhibit centralized characteristics in a discussion paper released Wednesday.
- The EU's crypto regulations exclude fully decentralized services but do not clearly outline what qualifies as fully decentralized.
Malta's financial authority is assessing the integration of decentralized finance (DeFi) within the European Union's Markets in Crypto-Assets (MiCA) regulations, with an emphasis on governance, accountability, and the definition of "full decentralization."
The Malta Financial Services Authority (MFSA) indicated that while MiCA excludes cryptocurrency services that operate "fully decentralized without any intermediary," many DeFi projects still show centralized traits such as administrator keys, concentrated governance, rights to upgrade protocols, and control over user interfaces, as discussed in a paper published on Wednesday.
The regulator is looking for input on whether decentralization should be viewed on a spectrum rather than as a binary classification, and whether a standardized framework should be established to identify when a protocol lies outside MiCA's jurisdiction.
DeFi remains a somewhat ambiguous topic under the EU's crypto regulatory framework, which does not include services that are fully decentralized, yet fails to provide a clear definition of when a protocol or platform achieves that status.
The MFSA's paper also questions if regulated crypto entities should perform smart-contract audits, governance evaluations, and risk assessments before adopting DeFi protocols in their offerings.
In addition to MiCA, the MFSA discusses potential legal frameworks for DeFi initiatives, such as decentralized autonomous organizations (DAOs) and segregated cell companies.
Moreover, it considers guardian agents, defined as automated systems that "monitor, evaluate, and restrict the actions of other autonomous systems to ensure compliance with predetermined goals and risk tolerances."
The discussion paper is open for public feedback until July 10.
DeFiMiCAAI Disclaimer: Portions of this article were created with the support of AI technologies and reviewed by our editorial team to guarantee accuracy and adherence to our standards. For further details, see CoinDesk's full AI Policy.Latest Crypto News- 1Crypto market positioning is 'defensive and thin' after Fed, Marex analysts say5 minutes ago
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CEX Volumes Drop to Lowest Since September 2024 as RWA Perps Hit Record High
CEX Volumes Drop to Lowest Since September 2024 as RWA Perps Hit Record High
In May, combined exchange volumes fell 3.45% to $4.41T; the lowest since September 2024. RWA perpetual futures volumes rose 10.4% against the trend, hitting a new all-time high.
By CoinDesk ResearchJun 15, 2026In May, combined exchange volumes fell 3.45% to $4.41T; the lowest since September 2024. RWA perpetual futures volumes rose 10.4% against the trend, hitting a new all-time high.
Why it matters:
In May, combined exchange volumes fell 3.45% to $4.41T; the lowest since September 2024. RWA perpetual futures volumes rose 10.4% against the trend, hitting a new all-time high.
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