Stakeholders not happy with Malta’s Virtual Financial Assets Rulebook

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The regulatory momentum in Malta is in full swing, as the self-described “Blockchain Island” looks to lead the cryptocurrency and blockchain space.

The Malta Financial Services Authority (MFSA) has now published a Virtual Financial Assets (VFA) Rulebook specifically pertaining to the regulation of Issuers of VFAs under the Virtual Financial Assets Act (VFAA). The rulebook’s publication, however, didn’t gone down well with financial services providers in Malta, with some complaining that it is quite farfetched and overtly demanding, over-cautious in several aspects and makes business slightly more complicated where cryptocurrencies and blockchain are concerned.

The stakeholders who spoke on condition of anonymity said that the rulebook needed to be drastically revised to be effective as in its current state, it was really going nowhere.

For its part, the MFSA said that they had received positive feedback on the introduction of new legislation which regulates ICOs as well as the provision of services in relation to Virtual Currencies.

The VFAA, published last July 20, will come into force as soon as it secures the approval of the minister for Digital Economy. Meanwhile, the MFSA issued a consultation paper where it set out regulations on exemptions, fees, control of assets as well as administrative penalties and appeals.

The authority is currently preparing the rules that will govern and complement the act as well as the VFA regulations. These rules will provide detailed regulation that will be applicable to operators in the financial services field.

The MFSA proposed the introduction of a Virtual Financial Assets Rulebook for VFA Agents in July, which it said will be divided 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.

The consultation for Chapter 1 of the Virtual Financial Assets Rulebook closed last July 31, while the consultation for the remaining chapters ended last August 13. According to the MFSA, the scope of this consultation is twofold: to obtain industry feedback in relation to Chapter 2 of the Virtual Financial Assets Rulebook; and the Authority’s interpretation of the transitory provision provided under Article 62(1)(a) of the Act.