Malta mulls new rules for cryptocurrency funds

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Legislators in Malta are embarking on a consultation phase, ahead of plans that would introduce new rules for cryptocurrency investment funds.

The proposals, which originate from the Malta Financial Services Authority, were published this week, and set out rules for how cryptocurrency funds manage the risks of their investment, govern their day-to-day operation, and engage with stakeholders and investors.

The proposals are the latest effort by authorities in Malta to make provision for cryptocurrency investment funds, following a spate of activity in the sector in recent months. The current consultation period is expected to close next month, at which point further amendments to the proposed rules are expected to be tabled.

According to statements from the Malta Financial Services Authority, their proposals could ultimately extend across a range of different fund types and structures.

“The MFSA is developing a rulebook to regulate Professional Investor Funds (“PIFs”) which have the investment in virtual currencies as their investment objective. The MFSA is presently considering whether Alternative Investment Funds and Notified Alternative Investment Funds should also be allowed to invest in virtual currencies.”

Stakeholders are being invited to submit responses on the new policy proposals until November 10, at which point the Authority intends to ‘audit and adjust’ the new rulebook based on the submissions received.

If enacted, the proposals would provide a greater degree of certainty, both for fund managers and for individual investors and other stakeholders engaged in cryptocurrency investments.

The Malta Financial Services Authority said the process was one that aimed to put investor concerns at the forefront, with the new policies specifically designed with investor protection in mind.

“The main proposals introduced within this new rulebook aim at safeguarding the interest of investors and the integrity of the financial market in the context of virtual currencies.”

The news comes as part of Malta’s wider strategy for blockchain technology, which aims to position the country as one of the world’s leading destinations for blockchain investments in future.

Launched in April 2017, the national blockchain strategy was described by Malta’s Prime Minister Joseph Muscat as one that would ultimately help position Malta as “a global trail-blazer in this regard.”