Malta initiates crypto regulation changes to align with EU’s MiCA regulation

Malta’s Financial Services Authority (MFSA) has launched a public consultation to gather feedback on proposed changes to its crypto regulations. The objective is to bring the regulations in line with Europe’s Markets in Crypto-Assets (MICA) regulations, slated to take effect in December 2024. Interested stakeholders and the general public have until September 29 to provide their input during the consultation period.

The revised rulebook seeks to align the rules governing exchanges, custodians, and portfolio managers with the EU’s MiCA regulations. Notable changes proposed in the VFA Rulebook include removing the systems audit requirement for VFA license holders, eliminating the need for professional indemnity insurance, and updating outsourcing requirements to align with MiCA.

With the introduction of MiCA regulations, existing crypto regulations in EU member states will be replaced by the universal MiCA laws. As an EU member, Malta had two options: either wait for the MiCA laws to come into effect in 18 months or modify its existing crypto regulations to align with the universal EU laws. The regulators selected the latter option to ensure a smooth transition for VFA license holders to MiCA-based laws and facilitate obtaining the EU license.

Malta’s VFA framework, initially established in 2018 with the Virtual Financial Assets (VFA), drew upon principles from the Markets in Financial Instruments Directive (MiFID). MiCA also incorporates several principles from the MiFID rulebook. France, another EU nation, has made similar amendments to align its existing regulatory guidelines for crypto with MiCA, which will take effect in early 2024.

The public consultation initiated by Malta’s Financial Services Authority is a critical step in the country’s efforts to align with the upcoming MiCA regulations. The proposed changes to the VFA Rulebook aim to streamline regulations, reduce burdens on businesses, and simplify the process of obtaining the EU license. Stakeholder input during the consultation period will play a pivotal role in shaping Malta’s future crypto regulatory landscape.