The Malta Financial Services Authority has approved 14 agents for crypto-assets, 17 weeks after the first applications were filed, paving the way for the sector to get going.
The approvals were made “in principle” as some minor details remain to be sorted out before the agents are officially taken on, according to MFSA sources.
The approval of the agents was the first step in setting up clients in this sector. They will be able to assist issuers and services providers under the Virtual Financial Assets Act came into force on November 1, 2018, coinciding with the Malta Blockchain Summit.
Once the Act came into force, applications started being filed with the MFSA. About 250 lawyers, accounts and auditors applied for certification, but nearly two-thirds failed the official assessment process, consisting of a short training course and exam.
Eventually, 28 formally applied to be agents.
The MFSA said on Tuesday that the agents would be the first level of defence as they would be obliged to evaluate their clients’ business plans – and ensure that they were ‘fit and proper’, prior to submitting an application to the MFSA. This will require a robust due diligence process on the clients – as the agents are themselves ‘subject persons’ under anti-money laundering regulations.
MFSA head of securities and market supervision Chris Buttigieg said the first batch of approvals represented an “important milestone” in the regulation of cryptoassets.
“We have worked actively since November 2017, when we started out regulatory journey in the field of cryptoassets, and today, we have a complete framework that caters for all key areas of risk, being inter alia the risks to consumers, market integrity, financial crime and cyber-security,” he said.
However, one issue remains: banks’ reluctance to open accounts for the clients. Dozens of companies involved in blockchain and cryptocurrency are encountering resistance when they try to open bank accounts.
Sources from company service providers, legal firms and corporate finance companies contacted by the Times of Malta – who asked to remain anonymous to protect their clients’ confidentiality – confirmed that banks were politely declining their business, saying it was outside their “risk appetite”. However, Parliamentary Secretary for Financial Services Silvio Schembri said banks were waiting for operators to obtain an MFSA licence before opening their doors – something that the approval of agents has paved the way for.