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.