Malta proposes DeFi rulebook covering DAOs under MiCA-era framework

Malta's financial regulator, the Malta Financial Services Authority (MFSA), proposed a comprehensive rulebook for Decentralized Autonomous Organizations (DAOs) on May 23, 2024, aiming to provide legal clarity within the European Union's Markets in Crypto-Assets (MiCA) framework. The MFSA's consultation paper, released this week, acknowledges the growing influence of DAOs in the decentralized finance (DeFi) sector and seeks to establish a regulatory approach that balances innovation with investor protection. The regulator highlighted that many entities currently operating as DAOs do not meet the threshold for full decentralization, necessitating a clear legal structure to govern their operations and liabilities. The proposed framework intends to address aspects such as legal personality, governance structures, and the responsibilities of DAO participants, drawing parallels with existing corporate law while adapting to the unique characteristics of blockchain-based organizations. This initiative positions Malta as a proactive jurisdiction in shaping the regulatory landscape for emerging digital asset technologies, particularly as MiCA comes into full effect.