Malta to Test Cryptocurrency firms for Financial Instruments
The paper follows a discussion paper issued on 30th November 2017 in which regulatory officials suggested a mandatory test as a method of determining the legal status of the initial coin offerings, digital currencies, and related service providers.
In particular, the ‘Financial Instrument Test’ could be utilized to choose if a DLT-related company, asset or service is encompassed under:
(i) The existing EU legislation and the corresponding national legislation,
(ii) The proposed Virtual Financial Assets Act
The Watchdog explains:
“It is imagined that the Test will be relevant both within the context of an Initial Coin Offering as well as during the intermediation of DLT assets by persons undertaking certain activities about such assets in or from within Malta.”
It says that the plan was met with an endorsement:
“Citing the need for clarity and legal certainty, the majority of respondents agreed with the MFSA’s proposal to introduce the Test.”
The consultation paper, issued on 13th April is a 40-page report which explains financial instruments under European law and explains how digital currency fits in. It asks 19 questions which industry participants are to analyze – feedback will be received until 4th May.
Malta has been showing itself as a welcoming jurisdiction for digital currency businesses, and two of the biggest digital currency exchanges in the world have already declared that they will be setting up offices on the island.
The government has made it evident that it means to host organization within a legal framework.
Prime Minister Mr. Joseph Muscat said, referring to cryptocurrency exchange Binance:
“They are not saying that they are coming to Malta because they can do what they want. They are saying they are coming because Malta is ready to regulate us, and we are bringing the user the peace of mind that there are people regulating this system.”
Bitcoin is one of the world’s most famous digital currency exchange. Originally from Shanghai, it reported in March that it is working on an agreement with Maltese banks and wishes to set up an office on the island shortly.