The Malta Financial Services Authority (‘MFSA’) has issued a Consultation Paper on Security Tokens Offering (“STOs”) which aims to provide legal certainty for STOs. This Consultation Paper seeks to link traditional securities with technology driven businesses, whilst also safeguarding investor protection, financial stability and market integrity. Further clarification as to which DLT Assets qualify as Security Tokens and how their issuance and listing on trading platforms should be regulated is made. Differentiation between ‘Traditional STOs’ and ‘Other STOs’ is also proposed.
Initially, the MFSA is to introduce a framework for Traditional STOs, whereas it proposes that further analysis is to be undertaken prior to introducing a framework for Other STOs. The MFSA is also distinguishing between centralised and decentralised exchange systems which, in the context of DLT, may be utilised as trading venues.
Furthermore, the Consultation Paper dedicates a section to the Market Abuse Regulation (MAR) (Regulation (EU) 596/2014) as being applicable to security tokens as a type of financial instrument, and another section to post-trade settlement.
The Consultation Document can be accessed here.