New important amendments to the VFA Act have been approved to ensure Malta is prepared for the upcoming implementation of MiCAR and solidifies itself as a jurisdiction of choice for crypto-asset issuers and crypto-asset service providers.

While the Maltese cryptocurrency framework is already recognised as being very much in line with MiCAR’s provisions, the amending Act to the VFA Act has made certain important changes to the current regulatory regime.

Aligning with MiCAR definitions

The amending Act introduces references to “asset-referenced token” and “electronic money token” as well as the MiCA Regulation itself. This is particularly relevant in view of the fact that Titles III and IV of MiCAR which relate to the obligations in relation to the issuance of Asset-Referenced Tokens and Electronic Money Tokens respectively, will apply as from 30 June 2024.

Removal of the VFA Agent Role

One important change that has been brought to effect is the removal of the role of the VFA Agent, which under the VFA Act was responsible to submit whitepapers and VFA service provider licence applications on behalf of applicants, and act as the main liaison between the issuer/licence applicant and the MFSA. As this role is not envisaged under MiCAR, the amending Act has thus removed this role with immediate effect.

The amending Act also aligns the obligations of issuers towards the MFSA as the competent authority in line with the provisions under MiCAR. Primarily this change is intended to remove the requirement to appoint the VFA Agent. While the relevant obligations in relation to issuers are still applicable, including the requirement to submit all necessary information and documentation to the MFSA, as well as submission of an annual certificate of compliance, they are now to be borne by the issuer directly.

Similarly, the role of the VFA Agent has been removed in the case of submitting licence applications. These can now be submitted by the applicant directly or by their advisors as is the case with all other MFSA licence applications.

Transitory Provisions

In order to provide clarity, particularly to issuers and licence applicants who may be caught in between the provisions of the current VFA Act and the upcoming implementation of MiCAR, the amending Act introduces specific provisions to ease this transition. It has thus been clarified that any issuer who seeks to register a whitepaper going forward is not required to appoint a VFA Agent. Similarly, any applicant seeking to submit a licence to provide a VFA service in or from Malta is no longer required to do so through a VFA Agent.

However, if a VFA Agent has already submitted a whitepaper or licence application before the coming into force of the amending Act, and the MFSA has not yet issued its determination, the VFA Agent is permitted to continue offering its services in respect of such application. Nevertheless, VFA Agents are being required to cease to offer their services within 3 months form the coming into force of the amending Act or until the MFSA issues a decision in relation to the pending application, whichever is the earlier.

Furthermore, any persons who currently have a pending licence application awaiting determination from the MFSA, are being requested to notify the MFSA in writing whether they shall proceed with the application or whether they shall withdraw it. If no such notice is submitted to the MFSA within 1 month from the coming into force of the amending Act, the MFSA shall consider the application as having been withdrawn.

It is also important to note that licence applications under Article 14 of the VFA Act may not be submitted and will not be accepted by the MFSA as from 1st August 2024.

Thus, any crypto-asset service providers intent on aligning their regulatory position ahead of MiCAR’s implementation date of 30th December 2024 would do well to consider these new timelines if seeking to be authorised by the MFSA.

GTG is well-positioned to assist prospective crypto asset issuers seeking to conduct an ICO and crypto-asset service providers wishing to obtain a licence from the MFSA. If you require regulatory advice or assistance in relation to the upcoming MiCAR, please get in touch with Dr Ian Gauci and Dr Cherise Abela Grech

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Disclaimer This article is not intended to impart legal advice and readers are asked to seek verification of statements made before acting on them.
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