Malta, also referred to as the “Blockchain Island,” is significantly changing the way that cryptocurrencies are regulated. The Markets in Crypto-Assets (MiCA) laws, which are anticipated to go into force in the European Union (EU) by December 2024, are the reason behind this action.
The Financial Services Authority (MFSA) of Malta has started a public consultation process, inviting interested parties and the general public to provide feedback on the suggested modifications. The country’s dedication to openness and stakeholder participation is demonstrated by the fact that the consultation period is still open until September 29th.
MiCA, which will soon be integrated into the EU’s regulatory framework, necessitates Malta’s reevaluation of its existing crypto regulations. The revised rulebook is designed to harmonize Malta’s crypto regulations with the EU’s MiCA regulations. These changes primarily impact exchanges, custodians, and portfolio managers, setting the stage for a unified regulatory environment across the EU.
Related: Lawyers warn MiCA Stablecoin transaction cap could hinder Crypto Adoption
Notable Amendments in Malta’s Crypto Regulations
Malta’s regulatory overhaul brings forth several noteworthy changes, including:
- Streamlined Auditing Requirements: The previous mandate for VFA (Virtual Financial Assets) license holders to undergo systems audits has been removed, reflecting a more flexible approach while maintaining robust oversight.
- Adjusted Capital Requirements: Capital requirements for Class 3 and 4 license holders have been revised, aligning them with the new financial landscape. These changes mean that Class 3 license holders must maintain $133,000 (125,000 euros), while Class 4 license holders need to sustain $159,000 (150,000 euros).
- Flexible Insurance Requirements: The requirement for professional indemnity insurance has been eliminated, providing license holders with more freedom in managing their financial obligations.
- Updated Outsourcing Guidelines: Outsourcing requirements have been updated in line with MiCA regulations, ensuring that Malta’s regulations are in sync with broader EU standards.
- Incorporation of MiCA Principles: MiCA’s service-specific rules have been seamlessly integrated into Malta’s VFA rulebook. This includes the amendment of requirements applicable to VFA exchanges, order execution, and client suitability.
- Simplified Client Categorization: The previous requirements related to client categorization have been removed, streamlining regulatory processes for license holders.
- Elimination of Certain Reports: The necessity for reports such as the Risk Management Report and the Internal Capital Adequacy Assessment Report has been eliminated, simplifying compliance for crypto businesses.
Malta’s Strategic Approach
As the EU prepares to transition to MiCA regulations, Malta, an EU member, faced a choice. It could either wait for 18 months until MiCA’s universal laws took effect or proactively amend its existing regulations to align with EU-wide standards. Malta opted for the latter, illustrating its commitment to fostering a conducive environment for crypto innovation and regulatory compliance.
Malta’s VFA framework, initially inspired by the Markets in Financial Instruments Directive (MiFID) principles, shared a common foundation with MiCA. These commonalities facilitated a smoother transition to MiCA-based laws and the acquisition of EU licenses for VFA license holders. Malta is not alone in this endeavor. Other EU nations, like France, have similarly revised their crypto regulations to align with MiCA. France’s adjustments are scheduled to be in place by early 2024.
In essence, Malta’s proactive approach underscores its commitment to maintaining its status as the “Blockchain Island” and a leading hub for cryptocurrency innovation within the EU. By embracing MiCA and modernizing its regulations, Malta positions itself to remain at the forefront of the digital financial revolution in Europe.
Rwlated: EU regulator to launch MiCA consultation in July