The Malta Financial Services Authority (‘MFSA’) has issued a consultation paper on The Virtual Financial Assets Regulations to be issued under the Virtual Financial Assets Act (the ‘VFAA’).
These proposed Regulations are intended to supplement the provisions of the VFAA. The purpose behind them is to safeguard financial stability, promote market integrity and ensure investor protection.
The following are the salient features of the proposed VFA Regulations:
The Regulations propose four different classes of licences as explained in the table below:
|Licensable Activities||Application / Notification Fee||
|VFAA Class 1||– Receiving and transmitting orders of VFAs;
– Providing investment advice in relation to one or more VFAs;
– Placing VFAs.
|€3,000||– For revenue up to €50,000 = €2,750;
– Further tranches of €50,000 up to a maximum of €1,000,000 = €350 per tranche or part thereof.
|VFAA Class 2||– Providing any VFA service and holding or controlling clients’ money, but not to operate a VFA exchange or deal for their own account.||€5,000||– For revenue up to €250,000 = €4,500;
– Further tranches of €250,000 up to a maximum of €5,000,000 = €400 per tranche or part thereof.
|VFAA Class 3||– Providing any VFA service and holding or controlling clients’ money, but not to operate a VFA exchange.||€7,000||– For revenue up to €250,000 = €6,000;
– Further tranches of €250,000 up to a maximum of €50,000,000 = €400 per tranche or part thereof.
|VFAA Class 4||– Operating a VFA exchange;
– Holding or controlling clients’ money, VFAs and, or private cryptographic keys;
– Custodian or nominee services solely in relation to the operation and activities of such VFA exchange.
|€12,000||– For revenue up to €1,000,000 = €25,000;
– Further tranches of €1,000,000 up to a maximum of €100,000,000 = €2,500 per tranche or part thereof.
The proposed Regulations set out an exhaustive list of persons who shall be exempt from the requirement of a VFA services licence. It is being proposed that certain exemptions are automatically applicable whilst others will require to be notified to or determined in writing by the MFSA.
The proposed Regulations also contain an exhaustive list of entities which are exempt from issuing an advertisement relating to a VFA service in or from Malta. This list includes any advertisements issued by the Government of Malta and the Central Bank, amongst others.
In order to provide protection for investors, the proposed Regulations introduce additional requirements in relation to the holding and/or controlling of clients’ monies and/or assets. These requirements are applicable to VFA Services licence holders and persons who are exempted from the requirement of such a licence.
The proposed Regulations also enable MFSA to impose administrative penalties on persons who fail to comply with any of the provisions of the proposed Regulations or rules issued thereunder. Furthermore, a right of appeal to the Financial Services Tribunal is also being proposed.