Malta, otherwise known as the “Blockchain Island” became one of the first jurisdictions in the world to legislate in favour of cryptocurrency and blockchain. Through the implementation of three Acts, they created a welcoming regulatory environment which provided clarity, certainty, and legal steadfastness- something the industry was in dire need of.
One of the Acts, called the Virtual Financial Assets Act regulates digital currencies in various forms, under the supervision of the Malta Financial Services Authority and the Malta Digital Innovation Authority. Coming into force at the end of October 2018, the new rules gave service providers a transitory period in order to bring their business and services under the scope of the Act. The time frame applicable for implementation and compliance varied between two weeks and 12 months, depending on the type of entity. Now, almost one year later, all transitory periods have come to an end and any entity wishing to offer VFA Services is obliged to commence the VFA License application process.
Any business wishing to carry out the services that are included under the scope of the VFA Act, in or from Malta must apply for a license no later than 31 October 2019.
The process for applying is as follows:
The provider must begin by submitting a letter of intent to the MFSA which must include a full description of the business structure, the VFAs Service licensing requirements as well as information on the individuals proposed to hold key positions, and a legal opinion which confirms the VFA cannot be considered as a traditional financial instrument.
Once this letter has been submitted, the Authority will then schedule a meeting with the application along with their relevant VFA Agent. The applicant then has 60 days to submit the documentation. All communications with the Authority, must be done through the authorised Agent.
Any service provider that is currently offering services that fall under the scope of the VFA Act and does not want to submit an application for a license is required to terminate their activities and submit a notification to that effect. The notice must be received by the Authority no later than 31 October and must include a declaration from the Board as well as a declaration confirming the entity has no outstanding obligations or debts with clients.
Any entity that does not apply for a License yet continues to offer the service in or from Malta, or that terminates services but does not notify the Authority within the given time frame, will be subject to regulatory action.
If you are considering setting up in Malta to provide a service that is covered by the VFA Act, then you will also need to apply for a VFA Service License.
Fast Offshore has been working with clients looking to establish business interests in Malta for many years. We are able to assist with company incorporation, tax advice, bank account opening, iGaming licensing, and a number of services relating to the establishment of blockchain and cryptocurrency products and services.
If you have chosen Malta as your jurisdiction of choice, then contact us today to allow us to give you our expert guidance on setting up and doing business in the Mediterranean.