Malta’s Financial Services Authority (MFSA) has begun public consultation over changes in its crypto regulations in order to align with Europe’s Markets in crypto-assets (MICA) regulations set to take effect in December 2024. The public consultation period is open until Sept. 29.
The revised rulebook proposes changes to the rules for exchanges, custodians and portfolio managers in order to align with the European Union’s MiCA. Malta first established its crypto framework in 2018 with the Virtual Financial Assets (VFA).
Some of the notable changes with respect to the VFA Rulebook are:
- MFSA has removed the systems audit requirement for VFA license holders.
- The capital requirements for Class 3 and 4 licence holders were reduced to $133,000 (€125,000) and $159,000 (€150,000) respectively.
- The professional indemnity insurance requirement was removed.
- The outsourcing requirements were updated in line with MiCA.
- The service-specific rules of the MiCA were incorporated in the VFA rulebook where the requirements applicable to VFA exchanges, order execution and client suitability will be amended.
- The requirements relating to client categorization have been removed.
- The requirement for a Risk Management and the Internal Capital Adequacy Assessment Report has been removed.
With the passing of the MiCA regulations, all existing regulations in the European Union nations will be replaced by the universal MiCA laws. Malta, being one of the several EU countries, had two options: either to wait for 18 months before the MiCA laws come into effect or amend the existing regulations to align with the universal EU laws, and the regulators in the country chose the second option.
The regulators in an interview in October last year stated that early modifications to their existing crypto regulations would help VFA license holders to seamlessly transition to MiCA-based laws and obtain the EU license. Malta’s VFA framework was based upon Markets in Financial Instruments Directive (MiFID) principles and MiCA has derived several principles from the same rulebook.
Apart from Malta, fellow EU nation France has also amended its existing regulatory guidelines for crypto to align with MiCA and come into effect in early 2024.