The Malta Financial Services Authority (MFSA) has issued a circular to clarify the licensing requirements and authorisation procedures in view of the transition from the current Virtual Financial Assets (VFA) Framework to the Regulation (EU) 2023/1114 on markets in crypto-assets (hereinafter referred to as ‘MiCAR’).
In view of this change in regulatory regimes, the authorisation procedure to be followed by an entity falling under MiCAR’s scope may differ on account of its current authorisation profile. To this effect, entities shall fall under either one of the following categories:
| Category A Entities | Entities possessing a licence as per the VFA Framework, prior to 30th December 2024 |
| Category B Entities | Entities in the process of applying for a license under the VFA Framework, and which are not yet in possession of one, prior to 30th December 2024 |
The process for authorisation as a crypto-asset service provider (CASP) for entities previously licensed or applying for authorisation in terms of the VFA Framework is as follows:
| Category A Entities | Category B Entities |
| May avail themselves of either: The Grandfathering Period contemplated by MiCAR and/orApply for a licence through the simplified application procedure as established by MiCAR. | Shall be required to: initiate a new application process in terms of MiCAR and any rules and regulations issued thereunder. Any new application submitted shall undergo the full authorisation process contemplated by MiCAR. Such entities shall not be able to avail themselves of the simplified application procedure as established by MiCAR. |
The MFSA has also indicated the documents that need to be submitted by Category A entities and Category B entities respectively. In the case of Category A entities, the documents to be submitted will largely dpeend on whether they were subject to the MiCAR thematic exercise in 2024. Category B entities on the other hand are required to largely emulate the MFSA’s standard authorisation process.
This update further follows the recent legislative changes which outlined the MiCA application fees to Category A and Category B entities respectively, as well as the annual fees applicable to MiCA licensed entities.
Based on this new process, the MFSA will be launching the following application forms relating to MiCAR authorisation in 2025:
This important update provides additional clarity particularly to those entities that are currently still in the process of obtaining a licence under the VFA Framework; however it also solidifies Malta’s position as a jurisdiction of choice for CASPs seeking to be regulated in the EU under MiCAR.
As the 30th of December deadline looms nearer, unregulated CASPs and issuers wishing to (continue to) provide their services and/or crypto-assets (including stablecoins) within the EU are required to evaluate their plans, assess the regulatory implications and seek a knowledgable and efficient regulator which can help them continue operating in a regulatory-compliant manner.
Further to the MiCA Regulation’s provisions, as well as applicable RTS and guidelines, the MFSA has issued a further update outlining amendments to the Investment Services Rules for Investment Services Providers (ISPs) along with the corresponding guidelines.
The MFSA has also launched the MiCA Notification Form for Investment Firms and Asset Managers.
While MiCAR does not regulate crypto-assets that are classified as financial instruments under MiFID II, it affects ISPs as it allows investment firms, AIFMs and UCITS ManCos to extend their existing licences to also include the provision of crypto-asset services. While such authorised entities are not required to obtain a new CASP licence, they are required to submit a Notification Form to the MFSA to extend their services; this form is to be submitted at least 40 working days before providing those services for the first time. The MFSA will then review the notification within 20 working days provided the Notification Form is deemed to be complete.
These ISPs are also required to comply with the Joint EBA and ESMA Guidelines on Suitability of Management Body Members and Shareholders for Entities under MiCA. If they are also licensed as CASPs, the ISPs must ensure that:
The Guidelines provide detailed instructions on conducting these assessments and outline the required information and methodology to be adhered to. ISPs looking to expand their horizons into the crypto-assets sphere are thus encouraged to assess the additional requirements on the basis of their setup and resources and submit the Notification Form together with the necessary supporting documentation in line with the imposed timeline.
For any information or assistance, please contact us at info@gtg.com.mt
News update by: Dr Cherise Abela Grech & Dr Catriona Cuschieri