Following the approval of the Virtual Financial Assets Act regulating crypto-currencies and crypto-related services, the MFSA has now approved the Financial Instrument Test, following a period of public consultation.

The MFSA has created the Financial Instrument Test to help issuers, VFA agents and licence holders to determine whether a Digital Technology Ledger (‘DLT’) asset is to be classified as a;

  • Virtual Token
  • Financial instrument; or
  • Virtual Financial Asset

Following MFSA’s consultation process on the Test, one must also determine whether a DLT asset is to be considered as Electronic Money as defined under the Third Schedule to the Financial Institutions Act (Chapter 376 Laws of Malta).

The Guidelines supplementing the Financial Instrument Test are applicable to issuers offering DLT assets to the public in or from within Malta and to persons providing any service and/or performing any activity, within the context of either the VFA Act or traditional financial services legislation, in relation to DLT assets whose classification has not been determined for any reason whatsoever, including inter alia because the offering of the said DLT asset was conducted abroad.

The Guidelines outline that users of the Test must act honestly, fairly and professionally. Important to note is that if a feature of the DLT asset changes along its lifecycle, the Test must be undertaken again.

The Test is divided into 3 stages;

  1. the inputting of user and DLT Asset details;
  2. the determination of the DLT Asset; and
  3. the declaration that the test was prepared in accordance to the VFA Act and its guidelines, in a truthful and complete manner.

The Financial Instrument Test is yet to come into force and future users must ensure that when making use of the Test, they refer to the latest published version by the MFSA.

The MFSA has invited interested parties and prospective users to test the Financial Instrument Test and address any queries and feedback by not later than 13th August 2018.

For more information on ICOs, Cryptocurrencies, BlockchainSmart Contracts and related areas please contact Dr Ian Gauci on and Dr Cherise Abela Grech on

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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