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Issuing a VFA from Malta

Malta was the first country to enact a comprehensive regulatory framework to cater for ICOs.  This move to regulate initial coin offerings inspired other regulators around the world to move to regulate the space themselves. 

Malta’s approach can be considered a brave step since regulation is often seen as burdensome and a cause of inconvenience to market operators.  However, pragmatic and balanced regulation also offers legal certainty to those operating within the regulated space, providing peace of mind.  Malta’s approach to regulation has struck a delicate balance between not being overly burdensome and also providing the certainty that so many issuers have been looking for.

Maltese lawmakers have differentiated between DLT Assets which fall to be classified as financial instruments, e-money, virtual tokens, which refers to what are commonly referred to as utility tokens in the cryptospace (with limited transferability rights), and Virtual Financial Assets (“VFAs”).  Anyone issuing virtual tokens is not captured by the regulatory framework for VFAs, and is therefore able to proceed with their token generation event without the need to prepare a prospectus or register a whitepaper.  Persons issuing financial instruments or e-money are captured by traditional securities regulation. On the other hand, issuers of VFAs are regulated by the Virtual Financial Assets Act (“VFAA”) and must therefore adhere to the provisions of Malta's bespoke regulatory framework when issuing a VFA in or from within Malta.

Launching an Initial Virtual Financial Asset Offering (“IVFAO”) in any jurisdiction may be tricky but this article aims to shed light on the Maltese issuance process in view of the clarity now offered by the Maltese regulatory framework.



Issuers of VFAs are now subject to the VFAA and the rules found in Chapter 2 of the Virtual Financial Assets Rulebook (the “Rules”).

Issuers must necessarily be a legal person constituted in accordance with Maltese law and must adhere to the general high-level principles found in the Rules when carrying out their function.  This includes inter alia performing duties in an ethical manner, acting honestly, fairly and professionally, whilst considering the investors’ best interests at all time.

The VFAA seeks to regulate IVFAOs where an issuer issues VFA in or from within Malta or where an issuer seeks to list its VFAs for trading on a DLT exchange.



The Issuer shall ensure that its business is managed in satisfaction of the dual control principle at all times, meaning that at least two (2) persons must be charged with directing the business of the issuer.  

The Issuer is expected to adhere to the following principles:

  1. Complying with all obligations under the laws, regulations, rules and any guidelines;
  2. Ensuring that the members of its Board of Administration collectively and individually acquire and maintain sufficient knowledge and understanding of the Issuer’s business to enable them to discharge their duties;
  3. Ensuring that the members of the Board of Administration of the issuer are informed with regards to the Issuer’s activities as a whole, have a proper understanding of the Issuer’s financial condition, and examine all documents submitted for the Board’s attention;
  4. Whenever the Board of Administration delegates any of its functions, such delegation shall not absolve the Board from the duty to supervise the discharge of such delegated functions.

The Issuer shall be a legal person duly formed under any law for the time being in force in Malta.

Accordingly, it is necessary to incorporate a Maltese Company, typically a private limited company (Ltd) or public limited company (p.l.c.), as the case may be.

However, it is also possible to launch a token issuance via a Foundation, following amendments introduced to the Maltese Civil Code.



An Issuer shall appoint, and have at all times appointed, the following functionaries, who are required to have sufficient knowledge and experience in the field of information technology, DLT assets and their underlying technologies, and have a good understanding of the Issuer’s business:

Systems Auditor – Responsible for reviewing and auditing the Issuer’s Innovative Technology Arrangement/s (ITA/s) (including cyber security arrangements) and shall also be charged with preparing an annual systems audit report on its ITA in compliance with guidelines issued by the Malta Digital Innovation Authority (MDIA);

VFA Agent – Responsible for acting as an intermediary with the MFSA, carrying out the fitness & properness assessment in respect of the Issuer, receiving confirmation from the Issuer that the Board of Administration has been established, ensuring that the whitepaper complies with the requirements of article 4 of the VFAA and endorsing the Financial Instrument Test;

Custodian – Responsible for the safekeeping of the Issuer’s assets and investor’s funds (shall be considered to be the ITA if custody of VFAs is being performed through such); however, custody of fiat currencies may only be carried out by a central bank, payment institution, money market fund, electronic money institution, bank in a third country or a credit institution.

Responsible for providing reasonable assurance that the financial statements are free from material misstatements and prepared according to an accounting framework.  Required to provide the MFSA with such information or verification as the MFSA may request


Money Laundering Reporting Officer – Responsible for ensuring compliance with all applicable Anti-Money Laundering and Prevention of Funding of Terrorism laws and regulations.



VFAs may only be offered to the public in or from within Malta, and subsequently may apply for admission to trading on a DLT Exchange if the Issuer’s Whitepaper complies with the requirements of the VFAA and is registered with the MFSA accordingly. 

The process for the registration of a whitepaper in accordance with the Maltese regulatory framework is as follows:



Prior to issuing or listing one’s DLT asset, an issuer must first determine the nature of the DLT asset by undertaking the FIT.  If the issuer determines that the token in question falls to be characterised as a VFA the issuer should consult a registered VFA Agent.  The VFA Agent would review the FIT and if in agreement with the issuer’s result, the determination of the DLT Asset as a VFA would be endorsed by the VFA Agent.

Any disagreement between the issuer and the VFA agent as to the nature of the DLT asset following the carrying out of the FIT is to be resolved between said parties.  The MFSA will not ordinarily make a determination on the nature of the DLT asset.



Prior to issuing a VFA or applying for its listing on a DLT exchange, an issuer is required to appoint a registered VFA Agent, which appointment shall be maintained at all times. The VFA Agent will guide the issuer throughout the issuance or listing process and act as an intermediary with the MFSA.  Grant Thornton has recently received its in-principle approval from the MFSA for its registration as a VFA Agent.



Prior to accepting to act as a VFA Agent to the issuer, a prospective VFA agent is required to determine whether the issuer is a fit and proper person.  This requires that the VFA Agent establishes that the issuer is of sufficient good standing and repute, has sufficient financial resources and that its board of administration has, collectively, sufficient knowledge, experience and expertise in the field of information technology, DLT and DLT Assets, at all times. 

A VFA Agent has an obligation to inform the MFSA whenever it determines a prospective client not to be a fit and proper person, providing an explanation as to the reasons why it does not consider such person to be fit and proper.



This shall include various policies, such as response and recovery plan, business continuity, sensitive data management, etc.

The framework must comply with internationally recognized cyber security standards and shall be in line with GDPR provisions.

The Issuer shall ascertain that its I.T. infrastructure ensures:

  1. the integrity and security of any data stored therein;
  2. availability, traceability and accessibility of data;
  3. privacy and confidentiality; and
  4. is in line with the provisions of the GDPR.



Drawing up of the Whitepaper in accordance with the form and content as prescribed in the First Schedule of the VFAA and any rules issued by the MFSA.

This includes requirements relating to the deployment of smart contracts.



Once the above stages have been completed, an Issuer, through his VFA Agent, must submit the following to the MFSA:

  1. White paper and supplementary documents signed by the Board of Administration;
  2. Copy of the Financial Instrument Test signed by the Board of Administration and endorsed by a VFA Agent;
  3. Confirmation from the Systems Auditor that the Issuer’s Innovative Technology Arrangement complies with MDIA guidelines;
  4. Annual audited accounts for each of the last three (3) financial years, and/or if the Issuer is part of a Group – the consolidated accounts of the Group;
  5. Certified copy of constitutional documents;
  6. Payment of whitepaper registration Fees - €8,000.



Once an issuer’s whitepaper has been registered by the MFSA, an issuer is to commence the offering of its VFAs to the public or admit its VFAs to trading on a DLT exchange within six (6) months from the date of registration of the whitepaper with the MFSA.



Record Keeping

The Issuer shall retain documents and keep them available for the MFSA to monitor the Issuer’s compliance in line with the Rules pertaining to Virtual Financial Assets.

Such documents are to be retained for at least five (5) years unless MFSA requests that such are kept for seven (7) years.

The medium wherein the documents shall be held must be accessible for future reference by the MFSA and in such a form and manner that the following conditions are met:

  1. unfettered MFSA access including the ability to reconstitute each stage of the transaction process;
  2. amendments and corrections to the contents of the documents must be easily ascertained;
  3. documents cannot be manipulated.


Annual filings

The Issuer must make the following annual submissions with the MFSA: 

  1. the Annual Compliance Statement submitted by VFA Agent on behalf of the Issuer;
  2. the Audited Financial Statements; and
  3. the Auditor Report.

Once the offering is completed or the VFA has been admitted to trading on a DLT exchange, the Issuer is obliged to draw up an annual compliance certificate in relation to its business. After being signed off by all members of the Issuer’s Board of Administration, the VFA Agent is to subsequently review same before submitting the said annual compliance certificate, including its statement, to the MFSA on behalf of the issuer.


Such statement shall include a confirmation that the VFA Agent is satisfied that:

  1. Local AML/CFT requirements have been satisfied, which confirmation should be obtained from the Issuer’s MLRO; and
  2. Issuer’s technology arrangement complies with any qualitative standards set, and guidelines issued by, the MDIA applicable to the particular type of arrangement, which confirmation should be obtained from the Issuer’s Systems Auditor.

An annual supervisory fee of €2,000 is payable by the Issuer to the Authority upon submission of the certificate of compliance.


Informing the MFSA of changes

The issuer is required to seek the MFSA’s approval prior to changing any of its appointed Functionaries, members of its Board of Administrators, or its beneficial ownership.

The MFSA may object to the proposed appointment or replacement and may require such additional information as it may consider appropriate.




Cap on maximum investable amount

An Issuer shall ensure that an investor (who is not considered as experienced) does not invest more than €5,000 in its IVFAO over a 12-month period.

An experienced investor does not necessarily equate to a professional and/or accredited investor and is required to possess knowledge of the industry and have previous experience with ICOs.


Sanctions when in breach

Where an Issuer breaches or infringes those provisions applicable to it under the VFAA and/or the Rules, the MFSA may by virtue of the authority granted to it under article 48 of the VFAA impose administrative penalties, without recourse to a court of law, up to a maximum of €150,000.


Get in touch

Grant Thornton has recently received in-principle approval from the Malta Financial Services Authority for its registration as a VFA Agent. VFA service providers seeking to apply for a license under the VFA Act must appoint a VFA Agent to assist them with their license application.

In order to ensure that all our client’s needs are met Grant Thornton operates a multi-disciplinary Fintech and Blockchain Advisory Team composed of specialists in different areas to assist in all other related matters. Get in touch now with one of our experts!


Disclaimer: This article is for informational purposes only. You should always seek the assistance of a professional to obtain advice with respect to any particular issue or problem.