VFA, Blockchain & Fintech

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Being one of the first countries to have its regulatory framework for Virtual Financial Assets, Cryptocurrency and Blockchain technology in 2018, Malta is considered to be at the forefront of embracing this revolutionary innovation. CSB Group can provide you with regulatory advisory services, assistance with licence applications and setting up a Fintech operation in Malta.

Fintech – Malta’s Beating Heart

Malta is the Fintech Hub of the Mediterranean and is the first EU Member State and country in the world to have launched a solid legislative framework in the Virtual Financial Assets, Blockchain and Cryptocurrency spaces, whilst also providing a new framework for start-ups and established entities who are desirous to register and certify their Distributed Ledger Technologies. Malta has therefore been able to garner substantial experience regulating and overseeing the affairs of and issuing of licences to VFASPs since the enactment of the Virtual Financial Assets (VFA) Act (Chapter 590, Laws of Malta) in 2018.

The Island is also encouraging start-ups to test their products and systems in a sandbox environment. This is seen happening in relation to Gaming Companies and the Malta Financial Services Authority is also in the process of creating its own sandbox and Fintech Hub Incubator. The University of Malta, together with the Malta Information & Technology Agency has also issued its own innovation hub. Fintech companies in Malta have already been witnessed to disrupt several sectors such as payments, insurance, investment, and risk management, and this is just the beginning.

MiCA (Markets in Crypto-Assets (‘MiCA’) Regulation 

Following its publication in the official journal of the European Union on 31st  May 2023, the MiCA Regulation enters into force in two stages in 2024 – the requirements applicable to issuers of e-money tokens (EMTs) or asset-referenced tokens (ARTs) shall come into force on 30th June 2024, while the requirements regulating crypto-asset services and un-backed crypto-assets will apply from 30th December 2024. 

Crypto-asset service providers (CASPs) choosing Malta as their jurisdiction to obtain a licence as a Virtual Financial Assets Service Provider (VFASP) will be adequately prepared to meet the various requirements under MiCA, given the fact that Malta’s VFA framework is deemed to already be MiCA-equivalent. 

The Malta Financial Services Authority (MFSA) is the national competent authority in Malta under the VFA framework, with over six years of experience in granting licenses and regulating the sector. Under MiCA, CASPs require authorisation by a national competent authority within the EU such as the MFSA.  Given the MFSA and the Maltese industry’s great deal of experience, existing and/or newly authorised VFASPs can benefit from a prompt transition to full MiCA compliance and passporting rights throughout the various EU/ EEA States.

In preparation of MiCA coming into force, recent minor amendments to Malta's Virtual Financial Assets (VFA) Act (Chapter 590, Laws of Malta), ratified by the Maltese Parliament, through the Virtual Financial Assets (Amendment) Act, 2024 (VFA Amendment Act) shall come into force on the 30th June 2024 marking a pivotal step in aligning Malta’s domestic legislation with MiCA. These changes reinforce Malta's position as a premier jurisdiction for crypto-asset issuers and service providers

Additionally, the MFSA is currently in the process of drafting the legal instrument which will effectively implement MiCA in Malta. This legal instrument will co-exist for a time alongside the VFA Act, with the latter being phased out in 2026 once all VFASPs licensed under the VFA framework have successfully transitioned to MiCA.

Applying for a new MiCA Equivalent licence as of 30th June 2024

The MFSA has worked closely with the industry to streamline, refine, and standardise its authorisation processes while still maintaining rigorous regulatory standards. 

As a result,  Malta delivers a clear, open, and transparent authorisation process to any prospective applicant.

It is important to note that an applicant wishing to be licensed as a VFASP in Malta must be a legal person established in Malta with key individuals resident on the island. Moreover, the VFA Act and MiCA both achieve high levels of investor protection by requiring CASPs/VFASPs to have robust governance arrangements, cybersecurity measures, as well as dedicated rules for the provision of crypto-assets services.

The CSB Group is backed by a highly skilled Fintech advisory team who professionally assists with various fintech services, from incorporating a company in Malta,  to the submission and pursuance of MFSA licence applications. CSB Group can provide you with regulatory advisory assistance throughout your entire licence application with the MFSA and thus assist you in obtaining full MiCA compliance and passporting rights throughout the various EU/ EEA States.

Preparation for current VFA Service Providers authorised by the MFSA

Following the alignment of the VFA Framework as mentioned above, the MFSA has focused its attention on operational readiness. Thus meaning that the MFSA shall:

  1. establish processes and procedures for the carrying out of the ‘simplified application procedure’ which will be applied to VFA Service Providers, whom are already authorised by the MFSA in terms of the VFA framework, once the MiCA Regulation enters into application on 30th June 2024; 
  2. outreach with VFA services licence holders in order to assess their MiCA readiness in preparation for the transition process which will commence following entry into application of the relevant MiCA provisions on 30 December 2024. This will ensure that existing and/or newly authorised VFASPs can benefit from a prompt transition to full MiCA compliance and passporting rights throughout the various EU/ EEA States.

Our team is capable of advising clients who are desirous in establishing an entity to provide VFA and crypto-related services, including but not limited to, crypto-exchanges or entities who would be providing investment advice, custody and portfolio management of virtual assets.

Whether you are a current licence holder or wish to apply for a new MiCA equivalent licence in Malta, please reach out for further information regarding how CSB Group may be of service.

 

Need our assistance with VFA, Blockchain & Fintech services in Malta?

Key Contacts

Franklin Cachia

Director & Lead Consultant

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Kyle Scerri

Senior Manager - Legal

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Testimonial

We at Staern Ltd are glad that we work with CSB Group. Experienced, dedicated and supportive specialists. People you can rely on even in very complex business challenges such as VFA Licence application. People you can trust. People who can motivate and continue to go forward even in very complex business challenges. We are very glad to work with CSB Group on our VFA Service Provider Licence.

Staern Ltd

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Need our assistance with VFA, Blockchain & Fintech services?

CSB Group can help you set up a successful Fintech operation in Malta.

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T: +356 2557 2557

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