Business 1 August 2018

Gerald Fenech

Malta regulator wants public input on its virtual financial assets rules

The consultation exercise to implement the three virtual currency and blockchain bills into Maltese legislation continues at a fast pace with further developments going on almost on a weekly basis.

This week, the Malta Financial Services Authority (MFSA) published a Virtual Financial Assets (VFA) Rulebook specifically pertaining to the regulation of Issuers of VFAs under the Virtual Financial Assets Act (VFAA).

Following the positive feedback received on the proposed introduction of a new legislative framework regulating initial coin offerings (ICOs) and the provision of certain services in relation to virtual currencies, the MFSA drafted and submitted to the government its proposed Virtual Financial Assets Act.

The Act, published last July 20, will come into force after Parliamentary Secretary for Financial Services, Digital Economy and Innovation Silvio Schembri publishes a notice in the Gazette. The MFSA said it is preparing the rules underlying and complementing the Act and the Virtual Financial Assets Regulations. The Rules will provide further detailed regulation applicable to operators in this field of financial services.

As presented in the Consultation Paper on the Virtual Financial Assets Rulebook for VFA Agents which was published on July 12, the MFSA proposed the introduction of a rulebook, titled the ‘Virtual Financial Assets Rulebook’, which will be subdivided into three chapters: Virtual Financial Assets Rules for VFA Agents, Virtual Financial Assets Rules for Issuers of Virtual Financial Assets, and Virtual Financial Assets Rules for VFA Service Providers.

Last Monday, the MFSA published for consultation the rules for issuers of virtual financial assets. According to the regulator, the consultation is part of a series that MFSA is issuing in connection with the rules and regulations “that will underlie and complement” the Act.

The consultation paper seeks “to obtain industry feedback in relation to [i] Chapter 2 of the Virtual Financial Assets Rulebook; and [ii] the Authority’s interpretation of the transitory provision provided under Article 62(1)(a) of the Act.”

The consultation is open to the public from July 30 to August 13, and can be accessed via the MFSA website. The regulator is also inviting interested parties to submit their comments and feedbacks regarding the consultation no later than August 13.

Note: Tokens on the Bitcoin Core (SegWit) chain are referenced as BTC coins; tokens on the Bitcoin Cash ABC chain are referenced as BCH, BCH-ABC or BAB coins.

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