As the official date for the entry into force of the Virtual Financial Assets Act (Cap. 590 of the laws of Malta, the ‘VFAA’), November 1, 2018 is set to be remembered as a watershed moment, the day Malta entrenched its leading role in the world of distributed leger technologies and digital assets.

A key component in Malta’s wider DLT Regulatory Framework, the VFAA presents Malta’s financial services industry with a unique opportunity and the appropriate regulatory tools to re-invent itself, propelling economic growth through new technology-rich industries and the digitalisation of existing ones.

It presents a unique opportunity

The VFAA introduces a new class of assets intrinsically dependent on, or which utilise, distributed ledger technologies (‘DLT Assets’). It conceives the asset class to be known as virtual financial assets (‘VFAs’) and sets out the regulatory requirements applicable to initial public offerings of VFAs (‘IVFAOs’), VFA Services (including VFA exchanges) and VFA Agents. The VFAA will be supplemented by a mesh of regulations and rules, including the VFA Regulations and VFA Rulebook, and provides for a pragmatic test for the classification of DLT Assets, which will determine the regulatory regime applicable to such assets.

With significant media attention being drawn towards the fledgling crypto-asset industry, as well as the wider ‘token’ economy, the VFAA comes at a vital time to promote its sound development by enshrining market integrity and investor protection. Pivotal to this outcome will be the gatekeeping role entrusted to VFA Agents who will be registered with the Malta Financial Services Authority (MFSA), and will be required to be appointed by market players who wish to carry out IVFAOs or VFA Services.

This piece forms part of Camilleri Preziosi’s ‘Beyond Blockchain’ weekly series, in which members of the firm’s Blockchain and Fintech teams map out how the landscape has evolved since the ‘Unravelling Blockchain’ series published earlier this year. For further information, contact blockchain@camilleripreziosi.com.  

Sign up to our free newsletters

Get the best updates straight to your inbox:
Please select at least one mailing list.

You can unsubscribe at any time by clicking the link in the footer of our emails. We use Mailchimp as our marketing platform. By subscribing, you acknowledge that your information will be transferred to Mailchimp for processing.