The Malta Financial Services Authority (MFSA) has initiated a public consultation regarding proposed alterations to its cryptocurrency regulations in order to harmonize them with the European Markets in Crypto-Assets (MICA) regulations set to take effect in December 2024. Interested parties have until September 29 to participate in the consultation.
The revised rulebook outlines changes to regulations pertaining to exchanges, custodians, and portfolio managers to align them with the European Union's MiCA standards. Malta initially established a cryptocurrency framework in 2018 with the Virtual Financial Assets (VFA) regulations.
Some significant changes to the VFA rulebook include:
Elimination of the system audit requirement for VFA license holders.
Reduction of capital requirements for Level 3 and Level 4 license holders to $133,000 (€125,000) and $159,000 (€150,000), respectively.
Removal of professional indemnity insurance requirements.
Updating of outsourcing requirements in accordance with MiCA.
Integration of MiCA's service-specific rules into the VFA rulebook, which will involve modifying requirements for VFA exchanges, order execution, and client suitability.
Removal of requirements related to customer classification.
Elimination of requirements for reporting on risk management and internal capital adequacy assessments.
Upon the adoption of MiCA regulations, all existing cryptocurrency regulations in EU member states will be replaced by a unified MiCA law. Malta, as an EU member, has two choices: either wait 18 months until MiCA law takes effect or adjust its existing regulations to align with the EU-wide law. The regulators have chosen the latter option.
In an interview last October, the regulator stated that early adjustments to its current cryptocurrency regulations would facilitate a smooth transition for VFA licensees to MiCA-based laws, allowing them to acquire EU licenses. Malta's VFA framework is founded on the principles of the Markets in Financial Instruments Directive (MiFID), which shares several principles with MiCA's rulebook.
