For many countries the concept of blockchain is not something new. In places it is exclusively about Bitcoins and the analogizes thereof; some are trying to implement it in banking structures and consolidate it at the state level. Legally, this issue is not resolved everywhere.
Malta is an example of a country that is a “blockchain island”. Here, the cryptocurrency market is completely legal and streamlined, and their standards are attractive to investors.
On July 4, 2018, the Maltese Parliament formally approved the first regulatory framework for blockchain, cryptocurrency, and Distributed Ledger Technology (DLT). Malta is the first country in the world that provides an official set of rules for operators in the blockchain, cryptocurrency and the DLT space.
HERE IS A REVIEW OF THE MAIN CHANGES IN THE LEGISLATION WITH THE ADOPTION OF NEW REGULATORY ACTS.
The First Malta Digital Innovation Authority Act (MDIA Act) provides the creation of MDIA, a body that will regulate innovative technologies, and establish a new level of communication with national competent authorities.
According to the Law, MDIA along with national authorities, issue guidelines for joint surveillance. These principles must ensure that in the specific case the correct priorities are applied to achieve the best result.
MDIA has sole responsibility (if given full control) or secondary responsibly (if it is providing a supportive function) in accordance with the investors’ requirements.
The main goal of MDIA is not only to perform supervisory and regulatory functions, but also to support and develop innovative technologies in Malta.
The Innovative Technology Arrangement and Services Act is the second important regulatory act, the purpose of which is to regulate the innovative technologies and services mentioned in the document.
The first and second annexes to the ITAS bill set the criteria for defining the innovative technologies (“ITA”) and innovative technology services (“ITS”), respectively. The law provides that technologies or services that have the characteristics of an ITA or ITS can be recognized as such, subject to the written decision of the MDIA on their acceptability. Although MDIA has been granted substantial authority to decide on an application for recognition of ITA or ITS, only the Tribunal has the right to review or appeal it in accordance with the provisions of the MDIA Act.
Also, at the legislative level, a new entity has been defined - Suppliers of innovative technologies. MDIA registers individuals providing various innovative technology services. Registration for the provision of one type of service does not prohibit the registration of the same person for the provision of other types of services. The technological innovation service provider will be provided with a registration certificate that will define certain relevant information, including an identification code and the classes of service that the applicant has registered to provide. This certificate should be available to all ITA users, as it is designed to provide transparency, certainty and confidence regarding certified ITA.
The appointment of a resident agent. The holder who has received permission for an innovative technology must have a valid designated resident agent in Malta, if he is not a resident himself. The function of the resident agent is to act as a channel of communication between the holder of the permission for innovative technologies, MDIA and other Maltese government departments and authorities.
With the introduction of the aforementioned registration and certification procedures, as well as a clear statement of the definition criteria for ITA and ITS, the ITAS Act gives a high appreciation of trust in the minds of potential investors. Such legislative changes serve to significantly strengthen the legal regime in this sector.
The third important regulatory act is The Virtual Financial Assets Act, 2018 (The VFA Act). The Law on Virtual Financial Assets provides for the regulation of Initial Virtual Financial Asset Offerings, Virtual Financial Assets, as well as regulation of issues related to them.
The law defines the necessary regulatory framework for the VFA (Virtual Financial Assets). In general, there are eight VFA services, and they are spelt out in the second application of the Law on Virtual Financial Assets. This activity cannot be carried out without obtaining a payment license which contains a requirement for the volume of funds the company must own.
In addition, this Law spells out in detail the clear requirements for a whitepaper, a document describing VFA services. No issuer should offer virtual financial assets to the general public in Malta or from Malta, unless such an issuer has prepared a technical white paper document.
The issuer is obliged to appoint a VFA agent registered with the competent authority in accordance with the Law, and who must monitor the fulfillment of all legal requirements by the issuer. The agent also needs to advise the issuer on all matters related to the acceptance of its virtual financial assets for trading on the DLT exchange and the like.
An application for a license must be filed exclusively through a VFA agent. The competent authority in Malta must create a public register of all license holders and VFA agents.
So, the approval of the three bills on cryptocurrency and blockchain were developed in order to make Malta one of the most attractive places to open companies.
Therefore, if you are still not sure about the opening of your company in Malta, our specialists will be happy to answer all your questions. We offer full support for opening of your company in Malta, from A to Z.
Our job is to obtain a financial license, find an agent, prepare constituent regulatory documents, pay state fees, as well as carry out all other actions necessary for registration of such a company.
It is obvious that in the near future Malta will become a pioneer in the field of economic innovation.