Malta’s Financial Services Authority (MFSA) has launched a public consultation to align its crypto regulations with Europe’s Markets in Crypto-Assets (MICA) regulations, set to take effect in December 2024. The public consultation period extends until September 29.
The revised rulebook aims to bring regulations governing exchanges, custodians, and portfolio managers in line with the European Union’s MiCA. Back in 2018, Malta initially established its crypto framework through the Virtual Financial Assets (VFA).
Notable changes within the VFA Rulebook encompass the removal of the systems audit requirement for VFA license holders, a reduction in capital requirements for Class 3 and 4 license holders to $133,000 (125,000 euros) and $159,000 (150,000 euros), respectively, the elimination of the professional indemnity insurance requirement, updates to outsourcing requirements to align with MiCA, incorporation of MiCA’s service-specific rules into the VFA Rulebook, thereby amending requirements for VFA exchanges, order execution, and client suitability. Additionally, client categorization requirements have been removed, along with the elimination of the Risk Management and Internal Capital Adequacy Assessment Report requirements.
With the implementation of MiCA regulations, all existing regulations across EU nations will be superseded by universal MiCA laws. Malta, as an EU member, faced two options: waiting for 18 months for MiCA laws to take effect or modifying its existing regulations to align with EU-wide laws.
The regulators chose the latter option. In an interview from the previous year, they highlighted that these early adjustments to crypto regulations would ease VFA license holders’ transition to MiCA-based laws, enabling them to secure EU licenses. Malta’s VFA framework originally drew from the principles of the Markets in Financial Instruments Directive (MiFID), with MiCA drawing inspiration from the same rulebook.
In addition to Malta, fellow EU member France has also adapted its existing crypto regulatory guidelines to align with MiCA, set to come into effect in early 2024.
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