Malta’s financial regulator has taken a step toward defining how decentralized finance (DeFi) and decentralized autonomous organizations (DAOs) could fit into Europe’s existing crypto rulebook. In a public discussion paper opened on June 12, the Malta Financial Services Authority (MFSA) proposes a potential legal framework for “software-based organizations,” a category intended to cover DAOs and other DeFi entities governed through software.

The consultation runs until July 10 and is explicitly tied to the European Union’s Markets in Crypto-Assets (MiCA) regime. While the MFSA acknowledges that truly decentralized services may fall outside MiCA, its paper argues that many DeFi projects still have elements that complicate any claim of full decentralization—creating uncertainty about who would be accountable under financial regulation.

Key takeaways

• The MFSA opened a DeFi consultation on June 12 under the EU’s MiCA framework, inviting industry feedback until July 10.
• The regulator suggests treating DAOs as a type of “software-based organization,” separating legal rules for the entity from rules for the underlying protocol.
• MFSA emphasizes MiCA’s exclusion for fully decentralized models, but says many DeFi systems retain centralized features that raise regulatory accountability questions.
• The push for clearer DeFi treatment aligns with broader EU work—including a European Central Bank paper and a European Commission MiCA review launched in May.

Why Malta is proposing a “software-based organization”

In its discussion paper, the MFSA frames a central regulatory challenge: MiCA does not neatly describe how governance and responsibility should work when a financial activity is coordinated through code rather than a traditional corporate structure. Rather than attempting to create a completely standalone legal concept for DAOs, the MFSA’s approach is more structural—defining DAOs and similar arrangements as “software-based organizations.”

According to the paper, this would allow regulators to focus on the legal characteristics of the organization using software governance, while keeping the rules for the underlying protocol and software distinct. The goal is to address a practical question for compliance and supervision: if governance is executed through decentralized mechanisms, who—if anyone—should be considered responsible for regulated activities and outcomes?

MFSA also underlines that MiCA’s scope is not meant to capture every kind of decentralized arrangement. The paper states that “MiCA excludes fully decentralised models from its regulatory scope,” adding that projects without intermediaries or central control may not need to comply with MiCA. The issue, in the MFSA’s view, is that many real-world DeFi projects do not convincingly meet that standard.

DeFi governance remains a scrutiny flashpoint in the EU

Malta’s consultation is arriving during a period of intensified EU attention to whether and how decentralized systems should be regulated under MiCA. Earlier in the year, a European Central Bank working paper examined governance and control across four major DeFi protocols and found that control remained highly concentrated. While the ECB analysis does not automatically determine MiCA applicability for every protocol, it added evidence to the argument that “fully decentralized” may be the exception rather than the rule in large DeFi markets.

That emphasis on governance structure continued in May, when the European Commission launched a targeted review of MiCA. The review sought feedback on several issues, including stablecoin interest payments and the treatment of DeFi—along with whether gaps in the framework justify further regulation.

Against this backdrop, Malta’s MFSA paper can be read as an attempt to convert a persistent policy debate into a workable legal taxonomy. If regulators cannot reliably distinguish fully decentralized services from arrangements with meaningful centralized influence, the burden falls on the market to anticipate which compliance obligations might apply.

Not everyone wants a second DeFi-focused rulebook

Even as Malta works on a DeFi-specific discussion framework, broader EU commentary suggests there is disagreement about whether DeFi requires its own separate regulatory track. In remarks reported earlier to Cointelegraph, European Commission adviser Peter Kerstens argued that policymakers should prioritize integrating tokenization into a broader digital asset framework rather than pursuing a “second version” of MiCA aimed specifically at DeFi.

That perspective highlights a tension within the EU approach: one camp believes decentralized finance needs clearer, DeFi-tailored treatment to address accountability and governance realities; another argues that tokenization and other digital asset developments are already broad enough for one coherent framework, reducing the need for a dedicated DeFi layer.

Malta’s “software-based organization” concept sits somewhere between these positions. It does not create a completely separate system from MiCA, but it does attempt to refine how key actors—especially DAOs—could be legally recognized so that MiCA’s responsibilities can be applied consistently when decentralized projects are not truly decentralized in practice.

What the MFSA’s proposal could mean for DeFi projects

For DeFi teams and governance stewards, the MFSA consultation raises a question that goes beyond legal vocabulary: how will regulators evaluate decentralization in ways that determine oversight and accountability?

By separating the legal framework governing the organization from the rules governing the protocol and software, the MFSA is implicitly pointing to a compliance model built around governance participation, decision-making authority, and the existence (or absence) of intermediaries. That approach could affect how projects document governance processes, define roles for contributors or administrators, and structure decision rights—especially where token holders, developers, or other groups retain meaningful influence.

At the same time, the MFSA’s emphasis on MiCA’s exclusion for fully decentralized models signals that the distinction will still matter. If a project can credibly demonstrate the absence of central control and intermediaries, it may argue it falls outside MiCA’s scope. If it cannot, the proposed legal categorization could make compliance planning more concrete—though it also suggests regulators may be looking closely at control concentration, not just the presence of governance tokens.

Whatever the final outcome, the consultation process itself is likely to be influential. By requesting input from the industry until July 10, the MFSA is effectively setting up a negotiation over definitions and boundaries: what exactly constitutes a “software-based organization,” and when does a DAO cross from a decentralized arrangement into something that demands traditional regulatory accountability?

For now, market participants should watch the submissions coming into Malta’s consultation and pay attention to how EU institutions continue to treat governance concentration and decentralization tests under MiCA—because the direction Malta is taking suggests regulators may increasingly rely on organizational accountability, not just code, when deciding whether DeFi fits within existing financial rules.

For the first time in seven years, the Irish government released an assessment related to digital assets, noting risks from money laundering, terrorism financing, sanctions violations and bribery.

The government of Ireland is taking aim at digital assets used in money laundering and terrorism financing as it moves to implement industry standards “relating to the acceptance of crypto-related activities as a source of funds” by the second half of 2027 as part of its policy priorities. 

In part of its implementation plan following a national risk assessment released on Thursday, the Irish department of finance said crypto assets presented “very significant” risks related to money laundering and terrorism financing. The government’s 2026 report was the first time in seven years that Ireland released a risk assessment related to digital assets, noting an increase in prosecutions related to money laundering and incidents of fraud in which using crypto was “particularly attractive” to criminal groups.

Source: Government of Ireland

In the time since its last report, Ireland noted that crypto “presents vulnerabilities that may facilitate sanctions evasion,” presented challenges to the country’s tax compliance and enforcement and was used to bribe corrupt officials responsible for decisions overseeing the industry. The government highlighted vulnerabilities in the sector, including “inconsistent international regulation” posing risks to Irish service providers and largely unregulated areas of the industry such as decentralized finance.

Ireland lacks many of the laws and regulations covering the crypto industry that are common in other jurisdictions like the European Union and United States. That’s despite its relatively high crypto ownership rates compared to other areas, with the Central Bank of Ireland reporting in December that about 10% of the population invested in crypto.

Related: BitGo courts crypto firms awaiting MiCA approval amid Binance licensing concerns

In November 2025, the central bank fined Coinbase Europe Limited about $24 million for Anti-Money Laundering and Countering the Financing of Terrorism violations, noting that the company delayed reporting failures in its transaction monitoring system.

Ireland banned crypto political donations

The risk assessment noted concerns about crypto being “increasingly used to make payments to corrupt officials,” but even official donations to political groups has been banned in Ireland for more than four years. In April 2022, officials proposed that no Irish political parties be allowed to accept cryptocurrencies like Bitcoin, Ether, privacy coins and others.

Magazine: OpenAI files for IPO, SEC scraps 611 rule and Hungary overhauls crypto: Hodlers Digest June 7-13

Cointelegraph is committed to independent, transparent journalism. This news article is produced in accordance with Cointelegraph’s Editorial Policy and aims to provide accurate and timely information. Readers are encouraged to verify information independently.

Several US government agencies responsible for financial regulation have issued a proposed rule as part of the implementation of stablecoin-focused legislation, pushing for similar identification guidelines for issuers as banks under federal law.

The Federal Deposit Insurance Corporation (FDIC), Federal Reserve, Office of the Comptroller of the Currency (OCC), National Credit Union Administration and the US Treasury’s Financial Crimes Enforcement Network (FinCEN) on Thursday proposed that stablecoin issuers be treated as regulated financial institutions in regard to verifying users’ identities. The proposed rule comes as part of the implementation of the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act, signed into law in July 2025.

Source: Federal Register

The proposed rule, which will be open to public comment for 60 days after it is officially filed in the US Federal Register on Monday, is intended to address Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) requirements for stablecoin providers through the GENIUS Act.

The minimum standards under the Bank Secrecy Act for financial institutions — potentially applied to stablecoin issuers under GENIUS — include “verifying the identity of any person seeking to open an account,” maintaining records of that information, and determining if the individual is a suspected terrorist or part of any terrorist organization.

The agencies’ actions were the latest implementation related to GENIUS, largely championed by US stablecoin issuers. The law is expected to go into effect 18 months after it was signed or 120 days after federal authorities finalize regulations for implementation.

Related: Banking group asks for more time to comment on US stablecoin bill

Treasury has already proposed AML and CFT requirements targeting illicit finance under GENIUS. In April, the FDIC suggested that rules providing insurance for corporate deposits of stablecoin issuers not extend to holders.

GENIUS passed, CLARITY still being weighed

After the passage of the GENIUS Act last year, the US Congress still has no defined timeline on addressing the Digital Asset Market Clarity (CLARITY) Act, a bill intended to redefine financial agencies’ roles in regulating and enforcing crypto rules.

While many in the White House and Congress expect the bill to pass by the August recess, concerns voiced by Democrats over potential conflicts of interest from lawmakers and elected officials could slow progress.

Magazine: The end of anon? AI could unmask crypto’s hidden identities

Cointelegraph is committed to independent, transparent journalism. This news article is produced in accordance with Cointelegraph’s Editorial Policy and aims to provide accurate and timely information. Readers are encouraged to verify information independently.

Iran has suspended a 60-day negotiation process with the United States less than 24 hours after signing a new agreement, while warning that Israeli strikes could trigger a renewed Strait of Hormuz blockade.

According to The Hormuz Letter, citing reports from Fars and Al-Mayadeen, Tehran halted the entire negotiation framework less than 24 hours after the agreement was electronically signed. 

BREAKING: Iran has suspended its entire 60-day negotiation period with the US over the direct violation of the MOU’s first clause, with Israeli attacks on southern Lebanon constituting a breach less than 24 hours after the MOU was electronically signed, per Fars and Al-Mayadeen.…

— The Hormuz Letter (@HormuzLetter) June 18, 2026

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Iranian officials argued that Israeli military operations in southern Lebanon violated the first clause of the memorandum, which they said was intended to halt hostilities and protect Lebanese sovereignty.

Israeli forces carried out overnight operations in southern Lebanon, according to reports cited by Iranian media. Tehran subsequently accused the United States of failing to ensure compliance with the agreement and rejected suggestions that Israel’s actions should be viewed separately from Washington’s responsibilities under the deal.

BREAKING: Iran warns of cancelling all upcoming negotiations, re-imposing the full Hormuz blockade and responding with missiles over the direct violation of the US-Iran MOU’s first clause, with Israel continuing military aggressions in southern Lebanon, including last night,…

— The Hormuz Letter (@HormuzLetter) June 18, 2026

Iranian officials also warned that the country would not unilaterally fulfill its own obligations under the memorandum until it receives assurances that Israeli military activity has stopped and that the U.S. has adhered to the agreement’s terms, according to The Hormuz Letter.

The dispute quickly disrupted diplomatic efforts. Reports indicated that an Iranian delegation had already been preparing to travel to Switzerland for the first round of negotiations before Tehran decided to suspend the entire process.

The planned talks were expected to begin a 60-day diplomatic track between U.S. Vice President JD Vance and Iranian Parliament Speaker Mohammad Bagher Ghalibaf. With the negotiations now paused, uncertainty has returned to a process that had only just begun.

Oil supply concerns return to financial markets

Attention has increasingly shifted toward the Strait of Hormuz, a critical route for global energy exports. Iranian threats to close the waterway have renewed concerns about potential disruptions to oil shipments despite recent declines in crude prices.

Market participants have closely monitored the route because a significant share of the world’s seaborne crude exports passes through the narrow passage connecting the Persian Gulf to international markets. Any interruption could tighten energy supplies and reverse the recent drop in oil prices toward the $75-per-barrel range.

Analysts have long warned that higher oil prices can fuel inflation pressures, complicating expectations for future monetary policy decisions. A renewed surge in energy costs could affect sentiment across equities, commodities, and other risk-sensitive assets.

Crypto traders react to rising geopolitical tensions

Digital asset markets moved lower as investors assessed the latest developments. Bitcoin fell below $63,000 on Thursday and briefly traded near the $62,000 level as traders reduced exposure to risk assets amid growing uncertainty in the Middle East.

The decline extended across the broader cryptocurrency market, where concerns over a possible Hormuz disruption added to existing macroeconomic risks. Traders have also been weighing how higher energy costs could influence inflation and interest-rate expectations.

Rising geopolitical tensions also triggered a wave of liquidations across crypto derivatives markets. According to CoinGlass data, approximately $499.34 million in positions were liquidated over the past 24 hours, with long traders accounting for $402.11 million of the losses. More than 125,000 traders were liquidated during the period as Bitcoin fell below $63,000 and broader market volatility increased.

With negotiations suspended and Tehran warning of additional retaliatory measures, investors are likely to remain focused on developments surrounding the U.S.-Iran agreement, Israeli military activity in Lebanon, and the future of shipping through the Strait of Hormuz.