In a move to align the country’s crypto regulatory framework to mirror the highly anticipated Markets in Crypto Assets (MiCA) legislation, Malta’s financial watchdog has announced a public consultation. The Malta Financial Services Authority (MFSA) ‘s move is geared toward harmonizing Malta’s existing crypto regulations to align with the forthcoming MiCA scheduled for implementation in 2024.
Hence, stakeholders are expected to weigh in and offer their opinions until September 29 to ensure the adoption of a progressive regulatory framework.
Changing The Regulatory Framework
The updated guidelines include proposed changes to crypto, exchanges, custodians, and portfolio managers to align with the European Union’s MiCA legislation. It is worth noting that Malta first laid the groundwork for its crypto agenda with the Virtual Financial Assets (VFA) in 2018 before its lawmakers proposed comprehensive crypto regulations.
Furthermore, the MFSA recently significantly changed the regulations governing VFA license holders. One notable difference is eliminating the systems audit requirement, which streamlines the compliance process for digital asset license holders.
Additionally, the proposal shows that capital requirements for Class 3 and 4 license holders will be distinct. Class 3 holders under the new rule have a capital requirement of $133,000 (125,000 Euros), while Class 4 attracts $159,000 (150,000 Euros).
These changes are intended to make it easier for businesses seeking these licenses to obtain them from the regulator. Moreover, a significant change is proposed for professional indemnity insurance.
This requirement has been removed, giving license holders more leeway in managing operational risks relating to their assets. This shift is the regulator’s response to the changing digital assets and blockchain technology landscape.
Going The MiCA Way
As the MiCA rules continue gaining traction, EU nations’ crypto regulatory landscape has significantly shifted. The EU expects these new laws to replace all existing regulations in its member countries.
However, Malta was in a fix as an EU member. They considered whether to wait 18 months to implement MiCA laws or take proactive measures to adapt existing regulations per the EU framework.
However, the country’s regulator chose the latter option, demonstrating a strong desire to align Malta’s regulatory landscape with the bloc’s standards when it becomes effective. In an official statement released in October 2022, the Maltese regulatory body stated that implementing the early amendment of its guidelines will enable the VFA licensed holders to transition to MiCA.
Additionally, the MFSA maintains that this would further help them obtain full EU approval as the countdown to MiCA implementation gains traction. It is worth noting that the country’s VFA model was based on the Markets in Financial Instruments Directive (MiFID) guides from which MiCA derived most of its objectives.’
Malta is not the only EU member state to have announced a review of its existing crypto rules. France has also made significant changes to its current crypto regulatory framework to meet the EU requirements.
These changes have been carefully crafted to align with the upcoming MiCA regulations. France is now taking proactive steps to ensure regulatory oversight regarding the fast-evolving digital currency landscape.
The country’s regulator has reiterated that it is preparing to adopt MiCA, a framework designed to bring coherence and stability to the EU’s crypto market.
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