The Role of the VFA Agent
Doing business in Malta
The Virtual Financial Assets Act (the ‘VFA Act’) requires a system of checks and balances which ensures that those who are advising clients in tokens and cryptocurrencies are qualified and competent. For this reason, the legislator felt the need to introduce the role of the VFA (Virtual Financial Assets) Agent within the virtual financial assets legal framework.
Who may act as a VFA Agent?
The VFA Act provides the requirements of who may act as a VFA Agent in Malta. It provides that a VFA agent may be a person who is registered with the Malta Financial Services Authority (MFSA) and authorised to carry on the profession of:
a) advocate, accountant or auditor; or,
b) a firm of advocates, accountants or auditors as well as entities registered as corporate service providers; or,
c) A legal organisation which is wholly owned and controlled by the persons referred to in paragraphs (a) or (b).
In addition, the Act also endows MFSA with the discretion to approve persons who hold other authorisations, qualifications and experience to act as VFA Agents. Nonetheless, it still remains to be seen to what extent can other ‘persons’ be deemed to hold the necessary authorisations, qualifications and experience.
The Financial Instrument Test and Whitepaper
The main responsibility of the VFA Agent shall be that of carrying out the Financial Instrument Test. This test determines whether the asset being subjected to the test is electronic money, a financial instrument, virtual financial asset or virtual token. Such a test must be carried out at a very early stage, before the submission of the whitepaper to the MFSA or the provision of a VFA service, because it will determine which laws, rules and regulations will apply for the issue and the classification of the asset. In fact, once the Financial Instrument Test is undertaken and the VFA Agent determines what the ICO will be doing, the VFA Agent will need to deal with the applicable law which will henceforth govern the issuance of such token/s.
Another fundamental responsibility of the VFA Agent is that of assisting the issuer of a virtual financial asset to draw up a whitepaper which must include information such as, for example, details of the issuer and information about the offer, amongst others.
In conclusion, the VFA Agent has the fundamental role of acting as an ‘intermediary’ between a prospective client and the MFSA. Indeed, it shall be primarily acting as a filter for the MFSA to reduce the number of instances of unwarranted applications which do not meet the necessary requirements for the attainment of a licence under the VFA Act.