Malta leading the way in the regulation of DLT and cryptoassets

In the fast evolving world of FinTech and RegTech, the MFSA is positioning itself as a leading innovator, while ensuring that a robust regulatory framework is in place which is efficient and allows the industry to innovate and develop. The MFSA’s aim in developing a new framework for virtual financial assets hinges on the need for a robust regulatory structure ensuring effective investor protection, financial market integrity and financial stability. Malta is the first country to regulate DLT and crypto assets in such a holistic manner, covering both the technological as well as the financial services components. Such approach gives legal certainty to such an embryonic sector until such time that an international consensus is reached on a more harmonised regime.

Officials from the MFSA presented the latest developments in field of Virtual Financial Assets in a Seminar targeting persons wishing to register as VFA agents under the upcoming VFA Act.

MFSA CEO Joseph Cuschieri, remarked that “the MFSA is entering a new era based on technological innovation and change. Fintech and Regtech is an area where Malta as a jurisdiction can be a thought leader and innovator.”

Mr Cuschieri further expressed his aspiration to lead the Authority into developing further innovative RegTech and FinTech policies to enhance Malta’s reputation as a robust and forward looking jurisdiction.

Dr Christopher P. Buttigieg, Director Securities and Markets Supervision Unit provided an overview of the MFSA’s policy framework on DLT assets. Dr Buttigieg noted that the Act applies a principles-based approach to regulation supplemented by MFSA guidance, rather than detailed rules which would possibly stifle technological innovation. Its provisions reflect the high-level principles enshrined in the existing EU financial services legislation in relation to the provision of investment services, financial markets and market abuse. The approach adopted in the Act vis-à-vis the classification of DLT assets, namely into (1) financial instruments, (2) electronic money, (3) virtual tokens and (4) virtual financial assets, caters for the entire DLT ecosystem, including hybrid models, and ensures utmost technology neutrality in an ever-evolving sector.

Officials from the MFSA presented the attendees with further details on the VFA Act, the VFA Rules as well as the Financial Instrument Test. Further information on the FI Test is provided on page 4 of this Newsletter. The presentations delivered during the Seminar are available on the MFSA’s Website.

During the seminar Mr James Farrugia, partner within GANADO Advocates, provided the audience with an overview of the Malta Digital Innovation Authority (MDIA) Act and the Innovative Technology Arrangements and Services Act frameworks and explained how the MDIA is going to coordinate and collaborate with the MFSA and other national competent authorities.

Source: MFSA Newsletter

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