The Malta Financial Services Authority (MFSA) has issued a Virtual Financial Assets (VFA) Rulebook explicitly relating to the regulation of Issuers of VFAs under the Virtual Financial Assets Act (VFAA).
But from the look of things, financial services providers are not happy about the release of this guideline. Some expressed that it is difficult and over-cautious in various ways and makes a business a little bit more complex where cryptocurrencies and blockchain are concerned.
Joseph Borg, Partner at WH Partners noted that even though the release of the guideline was a positive move, it needs some adjustments for it to be effective.
“I strongly suggest to stakeholders to participate in this consultation in order to help the MFSA come up with a well-balanced regulatory framework that is robust and attractive at the same time. It is clear that some things published in the rule book need to be polished and, in some cases, toned down. However, if sensible responses with workable solutions to the consultation paper are received, I am sure that our regulators will take them on board and fine-tune the framework accordingly”, Borg said.
Dr. Simon Schembri, Partner at Ganado Advocates Corporate Department also commented on the release saying:
“The two consultation papers relative to the first two chapters of the ‘Virtual Financial Assets Rulebook’ provide a well-defined framework for what will constitute the eventual two chapters of the Rulebook,” he stated. “There are some issues which merit further discussion with the regulator, and in fact, as interested parties in this space, we have already provided our feedback for relative amendments and clarifications within the time frame of the conclusion of the first consultation period relative to the first chapter. We are currently reviewing the second consultation paper relative to the second chapter, issued just two days ago and we will provide with our feedback to the regulator in due course.”
Other stakeholders also expressed their concerns on the condition of privacy stating that the guideline needs a thorough evaluation for it to be effective as in its present state, it was a ‘no go’.
After the positive response received regarding the suggested introduction of a new legislative guideline regulating Initial Coin Offerings (ICOs) and the provision of certain services in connection to virtual currencies, the MFSA enlisted and submitted to the Government the Virtual Financial Assets Act.
The Act was released on the 20th July 2018 and will be implemented on a date the Minister for Digital Economy and might set by notice in the Gazette. On July 4th 2018, the MFSA released a Consultation Paper on the Virtual Financial Assets Regulations to be released under the Virtual Financial Assets Act which puts forward a draft Legal Notice setting out regulations on: [i] exemptions; [ii] fees; [iii] control of assets; and [iv] administrative penalties and appeals (‘the Virtual Financial Assets Regulations’). This consultation closed on 20 July 2018.
For now, the Authority is preparing the guidelines underlying and supporting the Act and the Virtual Financial Assets Regulations. The Rules will give additional regulation applicable to operators in the field of financial services.