Malta plans to amend its registration requirements for crypto firms to better align with the European Union’s new regulations for the sector, which are set to come into effect in December 2024.
The country’s Financial Services Authority (MFSA) has launched a public consultation on proposed changes to its crypto regulations to align them with the European Union’s Markets in Crypto-Assets (MICA) regulations.
The proposed changes affect rules for exchanges, custodians, and portfolio managers, aiming to harmonize them with MICA. Some key changes include removing the systems audit requirement for VFA license holders, reducing capital requirements for Class 3 and 4 license holders, and updating outsourcing requirements.
These changes are part of the bloc’s wider efforts to transition smoothly to MICA-based regulations. Countries in the European Union are gearing up to implement the recently finalized rules, which will govern digital assets and firms operating within the single market.
MiCA is set to take effect over the next 12 to 18 months, and countries like France are already making preparations. France, which already has a comprehensive licensing framework for crypto firms, is working on adjustments to align its regulations and has been actively encouraging companies to register in the country as it positions itself as a crypto-friendly jurisdiction within the EU.
Maltese crypto providers had been operating under the transitory provisions set out in the country’s Virtual Financial Assets Act, which provides a set of rules for those operating a cryptocurrency-related business. License applicants must show to the country’s financial watchdog that they possess sufficient capability, coherence, and solvency to run the business.
Additionally, those applying for a license will be classified at the discretion of the MFSA into one of the four categories, which determine the requirements of license holders.
The Mediterranean island has already been one of the most desirable locations to set up shop in the blockchain space. The European Union’s tiniest member has earned the name “Blockchain Island,” with several top crypto exchanges have made Malta a central hub of their operations.
Malta was also one of the first countries to regulate the crypto industry and offer a legal framework for its application. Crypto exchanges were amongst the industry players that benefited the most out of this deal, as the Virtual Financial Act finally enabled their legal operation.
With significant media attention being drawn towards the fledgling crypto-asset industry, the act also outlines stringent requirements for other service providers, including brokerages, portfolio managers, custodians, wallet providers, investment advisors, and perhaps most crucially, cryptocurrency exchanges.
Earlier in 2018, the Maltese Parliament passed a law setting the framework for blockchain, cryptocurrency, and digital assets, becoming one of the world’s friendliest jurisdictions for a sector that’s caused concern among other regulators. The nation also hopes that this will serve to clean up its system and discourage scam entities from registering in Malta.