Malta Cryptocurrency Exchanges
Doing business in Malta
Acryptocurrency exchange, also known as a digital currency exchange (DCE), can be defined as a system that allows for the buying and selling of cryptocurrencies with other cryptocurrencies or cryptocurrencies with other assets, such as fiat currency.
Malta has been at the forefront in regulating cryptocurrency exchanges by enacting the Virtual Financial Assets Act (the ‘VFA Act’) which inter alia provides a definition of a VFA Exchange. Indeed, the Act defines a “VFA exchange” as a DLT exchange operating in or from within Malta, on which only virtual financial assets may be transacted in accordance with the rules of the platform or facility which is licensed by the Malta Financial Services Authority (MFSA) to provide such services.
Furthermore, Article 13 of the VFA Act states that no person shall provide, or hold itself out as providing a VFA service, which includes the operation of a VFA exchange, in or from within Malta unless such person is in possession of a valid licence granted by the MFSA.
In fact, in order to operate a VFA Exchange, one would need to have a Class 4 licence which allows licence holders to operate a VFA exchange, to hold or control clients’ money, virtual financial assets and/or private cryptographic keys and to provide custodian or nominee services solely in relation to the operation and activities of such VFA exchange.
The Act continues to explain that an application for a licence shall be made solely through a VFA agent which is duly registered with the MFSA.
In conclusion, one cannot leave out the fact that the enactment of the VFA Act which inter alia deals with VFA exchanges, has created legal certainty to the various international industry players using this technology that is ultimately attracting them to the blockchain island.