On 26 June 2018, the Maltese Parliament unanimously approved the Virtual Financial Assets Bill in an act to embrace the exciting future of digital currencies and their use in building tomorrow's businesses.
The Virtual Financial Assets Bill
The bill, which is the very first of its kind in any jurisdiction, covers both issuers as well as investors in regards to any form of crypto-currencies, crypto exchanges and any other crypto-related services. The bill also provides a regulatory framework for Blockchain technology, smart contracts and other innovative technological arrangements.
The bill terms a Virtual Financial Asset as any form of digital medium recordation used as a digital medium of exchange, unit of account or store of value that excludes electronic money, financial instruments and virtual tokens. The bill intends to categorically distinguish popular Bitcoin, Ether and Litecoin amongst others from other virtual assets that have no utility, value or application outside a limited platform which cannot be exchanged for funds.
The VFA bill also regulates the provision of VFA services as well as VFA exchanges, and therefore applies to all those involved in the provision of such VFA services and exchanges. These include brokers, wallet providers, asset managers, investment advisors as well as market makers offering cryptocurrency services. Consequently, these activities will be subject to a license to be issued by the Malta Financial Services Authority (MFSA) as the competent regulatory authority.
On the other hand, VFA exchanges have further been classified as a VFR service and are thus deemed to be a licensable activity. This will regulate those platforms that act as an exchange for converting fiat money (i.e bank notes and regular money denominated in Euro, USD, GBP etc.) to cryptocurrencies such as Bitcoin and Litecoin, and vice-versa, as well as exchanges converting one type of cryptocurrencies to another.
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