Malta takes lead in cryptocurrency race
The Maltese Government has issued three cryptocurrency bills – the Virtual Financial Assets Act, the Malta Digital Innovation Authority Act and the Innovative Technology Arrangements and Services Act.
To avoid possible negative connotations associated with the use of the word “cryptocurrencies” the laws are centred around the concept of virtual financial assets (VFA): ICOs are named initial VFA offerings, crypto-exchange becomes VFA exchange and crypto-services are defined as VFA services.
The newly introduced concept of VFA stands for "any form of digital medium recordation that is used as a digital medium of exchange, unit of account, or store of value", which is, however, "not electronic money, a financial instrument, or a virtual token". The use of virtual tokens is supposed to be limited to “the DLT platform on which it was issued” and the redemption for funds is to be available only “on such platform directly by the issuer of such DLT asset”.
The new pieces of legislation establish a framework for conducting and licensing initial VFA offerings, preparing white papers and regulating the activities of service providers, including exchange and trading platforms. They also lay down investors’ rights and obligations, as well as the MFSA’s and the Financial Services Tribunal’s powers in terms of ensuring proper execution of the crypto-related activities.
“It is important to note that these bills have yet to undergo the parliamentary debate, scheduled for next week, and the rulebooks are to be issued by the Malta Financial Services Authority,” says Nicholas Warren, Senior Manager Financial Services at Chetcuti Cauchi Advocates. “However, as the texts went public and showcased in the flesh the first ever attempt to legalise virtual currencies, Malta is close like never before to becoming a global pioneer in cryptocurrency regulation.”