The Virtual Financial Assets Act [CAP 590 of the Laws of Malta] regulates the issue and the provision of services in relation to DLT Assets. Under the Maltese regime, the terms “cryptocurrencies” and “virtual currencies” are not specifically defined; on the other hand, the regulator chose to use a term that can better cover the different elements of tokens which are intrinsically dependent on or utilise Distributed Ledger Technology (DLT). Thus, the term used under the Maltese regime is “DLT Assets”.
A DLT Asset can be classified as either of the following categories:
In order to offer legal clarity on the classification of each type of DLT Asset, the Malta Financial Services Authority (MFSA) devised the Financial Instrument Test. Thus, any person wishing to issue a DLT Asset to the public, or wishing to offer a service in relation to DLT Assets, must first conduct the Financial Instrument Test (FIT) to determine the legal classification of such DLT Asset/s. The FIT will determine under which regulatory framework that DLT Asset falls and whether further requirements must be met prior to proceeding with such issue or provision of services.
The FIT must thus be conducted prior to issuing a whitepaper or before listing any token on an exchange.
GTG can assist with conducting the Financial Instrument Test and offer further guidance as to the regulatory implications of the classification of any DLT Asset.