Key takeaways:
- Malta is proactively adapting its crypto regulations to align with MiCA’s impending implementation.
- The revised rulebook proposes changes to the rules for exchanges, custodians and portfolio managers in order to align with MiCA.
Malta, renowned for its crypto-friendly stance, is preparing to overhaul its cryptocurrency regulations in harmony with the European Union’s MiCA framework, set to take effect in 2024. These upcoming regulations represent a significant milestone as they will become the first comprehensive cryptocurrency rules in a major jurisdiction.
Once implemented, cryptocurrency firms in Malta can operate throughout the EU under a single license. As an EU member, Malta aims to synchronize its crypto rules with MiCA to facilitate a seamless transition for Virtual Financial Assets (VFA) Service Providers within the country, according to the regulator’s consultation.
Starting Monday, the Malta Financial Services Authority (MFSA) has initiated a public consultation process to gather input on proposed amendments to its existing rules governing cryptocurrency enterprises. This initiative aims to align the Maltese framework with MiCA’s provisions.
Specifically, the MFSA seeks to enhance regulations overseeing cryptocurrency exchanges, custodians, and portfolio managers. Notably, one key addition is the requirement for cryptocurrency service providers to establish a “systematic wind-down strategy.”
A letter of engagement serves as a necessary document to establish a clear understanding of responsibilities between the auditor and the cryptocurrency company.
According to the framework, the IT Auditor must also have an obligation to notify the Malta Financial Services Authority (MFSA) if there are any matters they deem necessary for the MFSA’s attention.
Furthermore, the MFSA will mandate the disclosure of the extent, type, and scope of Virtual Financial Asset (VFA) services provided by the company.
While not obligatory, licensed VFAs have the option to designate custodians. However, this requires a comprehensive assessment of the custodian, encompassing an evaluation of their systems, controls, and prior experience.
Notably, the capital requirements for Class 3 and 4 license holders have been adjusted to $133,000 (125,000 euros) and $159,000 (150,000 euros), respectively.
A noteworthy proposal within these revisions is the stipulation that cryptocurrency providers must develop a clear strategy for an orderly cessation of their operations, when necessary.
The public consultation concerning these proposed alterations will continue to accept input until September 29th. Malta, renowned for its advanced cryptocurrency regulatory framework, seeks to further harmonize its rules with EU standards through these actions.
