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Malta: A digital asset hub providing clarity and certainty through regulation

Malta has led the way in the regulation of the application of distributed ledger technology (DLT), including blockchain, to the financial world, paving the way for the issuers of DLT and digital assets as well as firms dealing with such digital assets.

ICO issuers making their offering in or from within Malta as well as virtual financial asset (VFA) service providers will now be subject to the Virtual Financial Assets Act (“VFAA”) which distinguishes between financial instruments, Virtual Tokens (colloquially referred to as non-tradable Utility Tokens), e-money and VFAs.


Launching an ICO in Malta

While not being overly burdensome, the new regulation stipulates the criteria that issuers of ICOs must comply with in order to be able to issue a VFA in or from within Malta or list their VFAs on a DLT exchange.

Firstly, it is necessary to incorporate a Maltese Company, typically a private limited company (Ltd) or public limited company (p.l.c.). However, it is also possible to launch a token issuance via a Foundation. The issuer must also have a proper structure in place and appoint a number of functionaries who can demonstrate proven knowledge and experience in the field of IT, DLT assets and their underlying technologies, apart from a good understanding of the Issuer’s business.

The issuer is then required to register a Whitepaper. The registration process can only be completed upon the appointment of a registered VFA Agent who will guide the issuer throughout the issuance or listing process and act as an intermediary with the MFSA at all times.

It is also the responsibility of the VFA Agent to determine whether the issuer is a fit and proper person and to determine whether the company has in place a robust cybersecurity framework and IT infrastructure. The VFA Agent will also assist its clients with the compiling of the Whitepaper. The new regulatory framework also subjects the issuer to a number of ongoing obligations, including proper record-keeping and annual filings.

Grant Thornton has recently received its in-principle approval from the MFSA for its registration as a VFA Agent.

Next week we will delve into the details of the registration process.