Malta Commences Public Consultation on Revised Crypto Regulations to Align with MiCA

Malta’s Financial Services Authority (MFSA) has initiated a public consultation to discuss changes to its crypto regulations in an effort to align with the Markets in Crypto-Assets (MiCA) regulations of the European Union, which are set to take effect in December 2024. The public consultation period will be open until September 29.

The proposed revisions to the rulebook aim to bring about changes pertaining to exchanges, custodians, and portfolio managers in order to align with the MiCA regulations. Malta initially established its crypto framework in 2018 with the Virtual Financial Assets (VFA) framework.

Notable Changes in the VFA Rulebook

• The requirement for systems audit has been eliminated for VFA license holders.
• The capital requirements for Class 3 and 4 license holders have been reduced to $133,000 (125,000 euros) and $159,000 (150,000 euros) respectively.
• The professional indemnity insurance requirement has been removed.
• The outsourcing requirements have been updated in accordance with MiCA.
• The service-specific rules of MiCA have been incorporated into the VFA rulebook, and the requirements pertaining to VFA exchanges, order execution, and client suitability will be amended.
• The requirements related to client categorization have been eliminated.
• The requirement for a Risk Management and Internal Capital Adequacy Assessment Report has been removed.

Upon the implementation of the MiCA regulations, all existing regulations related to crypto in EU member countries will be replaced by the universal MiCA laws. As an EU member, Malta had two options: either wait 18 months for the MiCA laws to take effect or make necessary amendments to its existing regulations to align with the universal EU laws.

Malta chose the latter option and decided to modify its current crypto regulations early on. This will assist VFA license holders in smoothly transitioning to MiCA-based laws and obtaining the EU license. Malta’s VFA framework was built upon the principles of the Markets in Financial Instruments Directive (MiFID), and MiCA draws several principles from the same rulebook.

In addition to Malta, France, another EU member, has also revised its existing regulatory guidelines for crypto to align with MiCA, which will come into effect in early 2024.

Editor Notes

It is encouraging to see Malta and other EU nations taking proactive measures to align their crypto regulations with the universal MiCA laws. By doing so, they are ensuring a seamless transition for crypto businesses and fostering the growth of the industry within the European Union.

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