What has happened?

Malta's new blockchain legislation may have been enacted but one Act is not yet in force and will take effect at a later date.

What does this mean?

At the beginning of the month, the Maltese Parliament passed three bills into law, establishing the first regulatory framework for cryptocurrency, blockchain and distributed ledger technology.

This made Malta the first country in the world to provide official regulations in this space.

However, at the end of last week, the Malta Financial Services Authority (MFSA) said that one of these laws, the Virtual Financial Assets Act, "is not yet in force".

"[It] will take effect on such date as the Minister for Digital Economy may establish by notice in the Government Gazette", the MFSA said in a statement.

The MFSA said that the Maltese government is currently devising the "Virtual Assets Framework", which underlines and complements the Act.

In this regard, earlier this month, Malta published two consultation papers.

The first, "Consultation Paper on the Virtual Financial Assets Regulations to be issued under the Virtual Financial Services Act", set out regulations on exemptions, fees, control of assets and administrative penalties and appeals.

The second consultation, which closes on 31 July, deals with Virtual Financial Assets Act Rules for VFA agents and presents the first chapter of the proposed Virtual Financial Assets Rulebook, which includes, among other things, high-level principles for VFA agents.

The MFSA will also consult on the second and third chapters of the rulebook in the coming weeks.

The MFSA said that the final regulations and rulebook will therefore be issued after the feedback to all the consultations has been considered.

Until such time as the framework is operational, the MFSA will not be "in a position to start receiving requests for approvals and authorisations under the Act".

The other two bills that were passed into law at the same time as the Virtual Financial Assets Act are:

At the time the legislation was passed, Silvio Schembri, Junior Minister for Financial Services, Digital Economy and Innovation within the Office of the Prime Minister of Malta, tweeted about the passing of the bills, noting that Malta was a pioneer in providing a solid legal framework for blockchain companies:

“The three Bills that will regulate distributed ledger technology (DLT) have been approved by Parliament and enacted into law. Malta, the first world jurisdiction to provide legal certainty to this space,” he wrote.

Next steps

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