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Why Malta Is The Best Place for ICO and Cryptocurrency Issuance

Malta Knights

 

When the giant exchange, Binance, announced it would move its operations to Malta, dozens of other exchanges followed closely behind. Just two months later, draft legislation for licensing the crypto- exchanges was quickly published, making Malta one of the first jurisdictions to implement this type of regulations, in the entire world.

The online magazine Medium has reported that the government of the island of Malta issued a consultation document to regulate any initial coin offerings (ICOs) and the decentralized ledger technology platforms (DLT platforms) operating on the island. This will affect all intermediaries who deal with virtual currency, including all brokers and exchanges. The regulations are designed to protect consumers who use these crypto-currency exchanges.

There are three sections in the legislative proposal. They are the Virtual Currencies Bill (VC), the Malta Digital Innovation Authority Bill (MDIA), and the Technology Arrangements Service Bill (TAS).

The Virtual Currencies Bill (VC)

The VC provides framework for regulating the intermediary services like brokers, wallet providers, exchanges, asset managers, market makers and investment advisors. The term ‘virtual currencies’ is used instead of crypto- currencies in hopes that the legislation will not need to be rewritten very soon as the crypto- currency technology advances in the future.

The Malta Digital Innovation Authority Bill (MDIA)

The MDIA makes it possible for any smart contracts and the DLT platforms specifically to be registered in order to comply with the government regulations. There are concessions in the new regulations to be certain that the MDIA does not overlap other preexisting authorities, which could create some delays or considerable confusion.

 

The Technology Arrangements Service Bill (TAS)

The TAS creates a base for an organizational system for registering Technology Service Providers and certifying Technology Arrangements.

The Virtual Financial Assets Bill (VFA)

All three of these new regulatory Bills are under the umbrella of the Virtual Financial Assets Bill (VFA), reports Medium. The VFA Act regulates all of the VFA services and the agents themselves.

  • The VFA agents will be taking initial applications from those who would like a license. The applications set out the system for the program of the operation, the security access protocols used in the platform, and several other details that are outlined in the newly published rule book.
  • Each applicant must be deemed a fit and proper person by the VFA agent, as regards to providing the VFA services.
  • The agent must deem each applicant as willing to observe and comply with all of the requirements set out in the VFA Act, plus any other rules or laws that may be applied to the applicant’s activities.
  • The application only applies to the activities regarding the VFA services. Other licences like those for online banks or payment services would not be considered compatible with the VFA services licence.
  • Licensed VFA service providers will need to have strict tools and appropriate procedures in place to make sure that market abuse can not take place on their platforms.
  • Malta is legislating these changes to be sure that market manipulation and insider dealing are minimized. If these illegal activities are detected by the licensed users, the licensee is required to report the activities to the MFSA.

The whole point of this new bill is to protect consumer users while promoting open market competition and innovation among the local license holders. Malta is carefully making sure that their license holders are suitable in terms of their personal and business reputations, so as to continue to protect the users, and the international reputation of Malta’s business community.

If you would like benefit from our expertise in these areas, or if you have further questions on this advisory, don’t estimate to contact our specialists or call us 786 462 7899.

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Fulton Abraham Sanchez, CPA

Fulton Abraham Sánchez, CPA is a Certified Public Accountant, specialized In Tax Planning, International Business, Wealth Management and Offshore Banking. You can email him to fa@fascpaconsultants.com or follow us on Facebook : FAS CPA & Consultants.

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