The Maltese market regulator, Malta Financial Services Authority (MFSA) has released a consultation paper relating to regulation of cryptocurrency companies. The release follows a discussion paper published on 30th November 2017 which proposed a mandatory test to determine the legal status of initial coin offerings (ICOs), cryptocurrencies and blockchain based services providers in the country. The country recently witnessed, some of the big cryptocurrency exchanges of the world approaching the government to set up their bases due to favorable industry dynamics and measures taken by the government.
The test known as “Financial Instrument Test” will categorize whether the blockchain-related company, asset or service falls under:
- Existing EU legislation and the corresponding national legislation
- Proposed Virtual Financial Assets Act
- Or, otherwise exempt
The consultation paper published last Friday (13th April) is a 40-page document which explains different provisions of Financial instruments listed under European law and how cryptocurrencies will fit under those provisions. The regulator intends to receive feed from industry participants until 4th of May after which it will move towards drafting final variation of the test.
The regulator explains: “It is envisaged that the Test will be applicable both within the context of an Initial Coin Offering as well as during the intermediation of DLT assets by persons undertaking certain activities in relation to such assets in or from within Malta.
The proposal from MSFA was met with approval: “Citing the need for clarity and legal certainty, the majority of respondents agreed with the MFSA’s proposal to introduce the Test.”
Malta has been projecting itself as a crypto-friendly nation and attempting to build a reputation of Blockchain Island in the world. In February it released a document titled, Malta – A leader in DLT Regulation and proposed to enact a Malta Digital Innovation Authority Bill and VFAA to attract crypto-related business to the island.
Binance, world’s largest cryptocurrency exchange has shown its intention to shift its base to the island nation and government has also welcomed the move. Its Prime Minister, Joseph Muscat commented on the move by Binance said: “They are not saying that they are coming to Malta because they can do what they want. They are saying they are coming because Malta is ready to regulate us, and we are bringing the consumer the peace of mind that there are people regulating this system.”
