Malta's financial regulator has issued a discussion paper on virtual currencies and given industry until the beginning of the new year to provide feedback about how they feel the sector should be regulated. 

The MFSA is hoping its discussion paper on Initial Coin Offerings, Virtual Currencies and related Service Providers will lead to a policy framework that supports virtual currencies and related technologies while ensuring effective protection for investors, financial market integrity and stability. 

Virtual currencies such as bitcoin are forms of digital money. Initial Coin Offerings are essentially forms of cryptocurrency crowdfunding, whereby start-ups sell investors a percentage of their newly-issued currency in exchange for fiat money, such as euro or dollars, or more established virtual currencies such as bitcoin. 

The discussion paper consultation period begins today and will close on 11 January 2018, with all interested parties invited to submit their feedback on vcfunds@mfsa.com.mt. 

The discussion paper comes in the middle of a turbulent week for the local cryptocurrency scene. On Monday, Times of Malta reported that Bank of Valletta was blocking cryptocurrency transactions, upsetting clients and raising questions about government talk of ramping up investment in the sector. 

Yesterday, parliamentary secretary Silvio Schembri declined to discuss specific banks' policies, but said he was confident cryptocurrency blocks would be "short-term" ones that would be reversed once a policy framework was in place. 

The MFSA has previously warned people that cryptocurrencies such as bitcoin are not regulated and therefore carried higher risks for people carrying or trading them.