MFSA to license virtual financial asset service providers

Chris Hamblin

12 September 2019

In July Malta's all-in-one financial regulator published Consultation Document on Pillar 1 – Regulations, which contains a proposal for a regulatory sandbox, discusses the principle of proportionality and calls for the adoption of RegTech, SupTech and smart regulation.

The application process is to begin with the VFA service provider sending the regulator a letter of intent which sets out:

comprehensive written description of the proposed structure;
the virtual financial asset services for which the firm seeks a licence, identifying the people it wants to hold key positions; and
a legal opinion to the effect that the proposed activity does not fall within the scope of traditional financial services legislation.

Some VFA service providers might not want to register, in which case they will have to cease operations. Each one will have to send the MFSA a note by the deadline, plus a signed declaration from the board that it is not providing a VFA service in or from Malta any more, along with a signed confirmation that it has no obligations towards its clients in this regard.

Malta passed the VFA Act last year with the aim of attracting firms that purvey distributed ledger technology (DLT).