With the entry into force of the Virtual Financial Assets Act (Cap. 590 of the laws of Malta, the ‘VFA Act’) officially set for the 1st of November 2018, market participants can look forward with optimism to greater regulatory certainty. This comes at an important juncture in the development of the fledgling DLT and crypto industries, with many industry observers lamenting the prevailing regulatory ambiguity as one of the principal obstacles to the mainstream adoption of DLT and crypto-assets.
The latest instalment by the Malta Financial Services Authority (the ‘MFSA’) in fleshing out the new regulatory regime consisted of publication of its ‘FAQs on the VFA Framework’. The MFSAs’ FAQs serve as a practical reference point addressing common queries that have been raised by the industry in the run-up to implementation date. The FAQs tackle a variety of issues including the requirements relating to initial offerings of VFAs, the provision of licensable VFA services, and VFA Agents. Importantly, the FAQs provide clarification on the applicability of the grandfathering periods envisaged under the VFA Act, as well as the applicable AML/CFT obligations. The MFSA’s FAQs are a useful tool in bridging the gap between the law on paper and the law in practice, enabling market participants to better avail themselves of the opportunities created by Malta’s VFA framework.
The MFSA highlighted the fact that as technological and industry developments are in a constant state of flux, the MFSA will be revisiting and updating its FAQs from time to time. This is a commendable approach, which illustrates Malta’s strength in adopting a technologically-neutral and forward-looking framework that is robust and yet flexible enough to evolve in sync with the industry’s development. This ability will be a key success factor in ensuring that Malta’s VFA framework is moulded to reflect the realities of the day, moving away from a model where regulation lags behind reality, to a situation where regulation and the industry evolve in tandem.
Members of our dedicated Blockchain and Fintech teams are available to discuss any queries you may have on the MFSA’s FAQs and welcome further queries that you may wish to discuss, with a view to putting them forward to the MFSA for consideration and, if appropriate, for inclusion in the next updated iteration of the FAQs.