On the 25^th February 2019, the Malta Financial Services Authority (“MFSA”) published the finalized version of Chapter 3 of the Virtual Financial Assets Rulebook: Virtual Financial Assets Rules for VFA Services Providers (“Chapter 3”).

The publication of Chapter 3 represents the finalization of Malta’s legal framework regulating cryptocurrency (defined as “virtual financial assets”/ “VFAs”) services and services providers. It applies to service providers seeking to obtain a VFA Services License under the Virtual Financial Assets Act (Cap 590 of the Laws of Malta) (“VFA Act”) and to service providers that have been conferred a VFA Services License.

From a high-level perspective, Chapter 3 sets out:

1. Principles which should guide VFA Service Providers in the provision of their VFA services;
2. The licensing requirements and licensing process;
3. Ongoing obligations which VFA Service Providers must adhere to; and
4. Enforcement and sanctions in the case of misconduct.

Registration of VFA Agents is in the process of being concluded by the MFSA and further information and guidance on the VFA Services License procedure as well as its implementation will follow once the registration of VFA Agents has been concluded by the MFSA. In this regard, it should be noted that the VFA Agent is an intermediary who, in a nutshell, is authorised to advise on VFA Services Licenses and to act as a liaison between the MFSA and a client.

VFA Service Providers benefitting from the transitory provision under the VFA Act remain under an obligation to comply on a best effort basis. Such VFA Service Providers shall apply for a VFA Services License within 12 months from the date of the coming into force of the VFA Act, namely the 1^st of November 2018.

The MFSA’s circular announcing the publication of Chapter 3 can be accessed here: https://www.mfsa.com.mt/wp-content/uploads/2019/02/20190114_VFAR_Chapter3_Circular.pdf.

Furthermore, the finalized Chapter 3 is accessible here: https://www.mfsa.com.mt/wp-content/uploads/2019/02/VFAR_Chapter3.pdf.

Article by Dr Terence Cassar.

For more information on Fintech, Cryptocurrencies, ICOs, Blockchain and related areas please contact Dr Ian Gauci on igauci@gtgadvocates.com, Dr Terence Cassar on tcassar@gtgadvocates.com and Dr Cherise Abela Grech on cabelagrech@gtgadvocates.com.  

Disclaimer: This article is not intended to impart legal advice and readers are asked to seek verification of statements made before acting on them.