Malta’s Financial Services Authority (MFSA) has commenced a public consultation to revise its crypto regulations in accordance with Europe’s Markets in Crypto-Assets (MICA) regulations, set to come into effect in December 2024. The consultation period is open until Sept. 29.
The proposed changes to the rulebook aim to align the rules for exchanges, custodians, and portfolio managers with the European Union’s MiCA. Malta originally established its crypto framework in 2018 with the Virtual Financial Assets (VFA).
Notable changes to the VFA Rulebook include:
- The MFSA has eliminated the systems audit requirement for VFA license holders.
- The capital requirements for Class 3 and 4 license holders have been reduced to $133,000 (125,000 euros) and $159,000 (150,000 euros), respectively.
- The requirement for professional indemnity insurance has been removed.
- The outsourcing requirements have been updated to align with MiCA.
- The service-specific rules of MiCA have been incorporated into the VFA rulebook, amending the requirements for VFA exchanges, order execution, and client suitability.
- The requirements for client categorization have been eliminated.
- The requirement for a Risk Management and Internal Capital Adequacy Assessment Report has been eliminated.
Upon the implementation of the MiCA regulations, all existing regulations in EU nations will be replaced by the universal MiCA laws. As an EU member, Malta had two options: either wait 18 months for the MiCA laws to take effect or revise its existing regulations to align with the universal EU laws. The regulators chose the latter option.
In an October 2020 interview, regulators stated that early modifications to their current crypto regulations would facilitate a seamless transition for VFA license holders to MiCA-based laws and enable them to obtain an EU license. Malta’s VFA framework was based on the principles of the Markets in Financial Instruments Directive (MiFID), with MiCA incorporating several principles from the same rulebook.
In addition to Malta, France, another EU nation, has also revised its existing regulatory guidelines for crypto to align with MiCA, which will come into effect in early 2024.
Related: Industry leaders and policymakers react to passage of MiCA in EU
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