The Malta Financial Services Authority is currently involved in a consultation exercise to ensure that all stakeholders are well informed on what the three blockchain and crypto laws that were passed recently, entail.
Reports in the local media have interpreted this situation as a stalling on the MFSA’s part but this is quite a normal procedure according to sources in the industry.
The MFSA has told the blockchain sector to wait because although the laws have been passed, they are not yet in force. Although the three crypto and blockchain bills were passed into law last July 20, consultations with the MFSA are still ongoing for these bills to actually become law. In fact, the MFSA said that the framework for these laws was still in a creation phase.
It has been announced, however, that the laws will become effective on 1st October. MFSA advised the operators to wait for a public announcement from the authority before sending requests for approvals and authorisations. Earlier this month, Maltese MPs passed the Virtual Financial Assets Act. This is one of the three bills which is focused in introducing regulation for the block chain sector.
Malta has arguably become the first country in the world to develop a regulatory system which is custom made for blockchain-based businesses. The MFSA is still consulting with various service providers and is expected to publish a Rule Book by the end of the month.
The VFA Act introduced a new regulatory body which will be responsible for overseeing the sector, the Malta Digital Innovation Authority Act (MDIA) and the Innovative Technology Arrangement and Services Act. (ITAS). The Maltese Parliament has been instrumental in introducing a ‘financial instrument test’ which determines whether a DLT asset qualifies as electronic money, s financial instrument, a virtual financial asset or a virtual token.
The MDIA Act is responsible for the certification and supervision of technology arrangements, which include DLT platforms, and related service providers who apply voluntarily for registration under the Innovative Technology Arrangements and Service Act.
Publication of the laws in the government gazette has to wait until regulators have developed a framework underlying the VFA Act. The MFSA, in the meantime, has been busy gathering stakeholder opinions on regulations. These range from exemptions to fees and administrative penalties which are related to the VFA Act. The consultation period ends on July 27. Once these consultation periods are over, the MFSA will then be issuing final rules and regulations for the VFA Act.
Following the enactment of the blockchain framework legislation by the Maltese Parliament on July 4, 2018, the first legal notice establishing the effective date when the Malta Digital Innovation Authority comes into force has been published. By means of Legal Notice 250 of 2018, the Minister for the Digital Economy has established July 15, 2018, as the date on which the provisions of the Malta Digital Innovation Authority Act shall be deemed to have come into force. The Malta Digital Innovation Authority is now formally set up.
This now officially starts the process for the recruitment of staff and the detailed regulatory regime on DLT and smart contracts and related innovative technology. This is expected to occur over the summer so that in October 2018 the provisions of the Innovative Technology Arrangements and Services Act will also come into effect.
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