DAC8 Compliance for DeFi Platforms: Current Scope and Future Risks

Decentralized finance (DeFi) platforms present one of the most challenging classification questions under DAC8. While purely decentralized protocols currently fall outside the directive's scope, the boundary is blurred and evolving.

The Current Position

DAC8's reporting obligations fall on identifiable entities that provide crypto-asset services. Purely decentralized protocols — those with no identifiable operator, no centralized governance, and no entity collecting fees — do not have an entity to bear the reporting obligation and are therefore outside DAC8's direct scope.

When DeFi Enters Scope

DeFi activities may trigger DAC8 obligations when an identifiable entity operates a front-end interface to the protocol, a governance body or foundation controls protocol parameters, an entity collects fees or commissions from protocol activity, or a CASP integrates DeFi functionality into its platform (for example, offering DeFi yield products to custody clients).

In these cases, the identifiable entity may be classified as a CASP under MiCA and therefore subject to DAC8 reporting.

Future Regulatory Direction

The European Commission has signaled its intention to monitor DeFi developments and potentially extend regulatory coverage. DAC8 includes review clauses that could be used to expand its scope to capture DeFi activities more comprehensively. CASPs operating in or adjacent to the DeFi space should prepare for a gradual tightening of regulatory requirements.

Practical Considerations

CASPs that offer DeFi access through their platforms should assess whether their DeFi-related activities generate reportable transactions under DAC8, ensure that user identification and transaction data are captured for DeFi transactions facilitated through the platform, and monitor regulatory developments for changes to DeFi's treatment under both MiCA and DAC8.

Conclusion

While purely decentralized DeFi is currently outside DAC8's scope, the boundary is narrow and likely to tighten. CASPs with DeFi exposure should adopt a conservative compliance approach and prepare for potential regulatory expansion.