By end 2024, new rules regulating the markets for crypto-assets come into effect. These rules are outlined in the Markets in Crypto Assets Regulation (MiCA), which regulates both those issuing crypto assets and those providing various crypto-asset services. However, a significant exception applies to cases where the offering is completely decentralised. If the offering is completely decentralised, the service is not covered by the regulation and does thus not require licensing. Therefore, it becomes crucial for actors to understand when an offering is deemed to be completely decentralised.
The Danish FSA elaborates on these matters in a newly published paper on decentralized finance. The purpose of the paper is to provide necessary guidance on the elements that form the basis for assessing when an offering can be considered fully decentralised.
"The principles will assist relevant actors in understanding the factors that should be considered when determining whether an offering can be considered fully decentralised," says Tobias Thygesen, Director of the Danish FSA’s division for FinTech, Governance, Payment Services and Crypto-Assets.
The regulation does not elaborate on this issue, and an incorrect classification could result in providing unlawful services.
"It is important for relevant actors to carefully consider whether an offering can be classified as decentralised, as it is illegal to provide regulated services without a license. In this regard, the Danish FSA is also available for dialogue to provide guidance on the practical application of these principles," continues Tobias Thygesen.
The paper contains an introduction to the concept of decentralised finance, detailed criteria for assessing decentralisation, and outlines how these criteria will be iterated in the future.
Read the full briefing here.