Category: VFA Act

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An intro to Malta’s Innovative Technologies Regulatory Framework

Categories Blockchain, Cryptocurrency, ICOs, Malta, The Blockchain Island, DLT Regulation, VFA Act, DLT

An intro to Malta’s Innovative Technologies Regulatory Framework

November welcomed two new acts which came into force in Malta seeking to regulate the DLT, cryptocurrency and ICO markets. The country has positioned itself as a leading innovator in the regulatory treatment of such industries, with blockchain technology at the forefront of its agenda.

Over the last year, a collaborative and consolidated effort has been underway to develop and then enact the new legal framework that comprises of the Virtual Financial Assets Act, the Malta Digital Innovation Authority Act, and the Innovating Technology Arrangements and Services Act. The first of its kind, not just in Malta but globally, it will hopefully not only cement Malta’s position as a jurisdiction of choice for those looking to operate in these spheres, basing their own legal frameworks on these three acts.

A step forward

This is an important step forward in the global industry and is sure to bring technologists and innovators to the country in order for them to escape from the regulatory grey-area that exists in the crypto ecosystem. Based on sound legal and regulatory principles, the acts are set to promote legal certainty, drive consumer adoption, and instil confidence in the market.

In order for the industry to truly succeed, legal certainty needs to be attained in respect of what the applicable fundamental legal tenets of governance, ownership, and liability are – something that is being hotly debated in other jurisdictions.

Comprehensive legislation

The DLT and blockchain framework takes steps to combine business, legal, and technological aspects together through a range of regulatory tools including VFA Agents, System Auditors and Subject Matter Experts. There are also measures in place that relate to whitepapers, smart contracts, cybersecurity, and blueprints.

With the march of innovation and technology seeming totally unstoppable, Malta’s willingness to embrace and regulate them has put the country in pole-position on the global stage. By enacting these flexible but stringent rules, the sector will grow and develop whilst retaining its integrity. Furthermore, Malta’s reputation as a jurisdiction of choice for blockchain and crypto-related businesses will go from strength to strength.

E&S Group is a leading corporate & law firm offering various services with regards to ICOs. Feel free to contact us directly on +356 20103020 or by email at [email protected] to find out how E&S can help you in ‘making things happen’.

For more information click the link.

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It’s official, Malta has welcomed the VFAA and ITAS today!

Categories Blockchain, Malta, The Blockchain Island, DLT Regulation, E&S Group, Technology, Regulation, VFA Act, DLT

It’s official, Malta has welcomed the VFAA and ITAS today!

The long wait is over, Malta has set to become a world leader and a pioneer in regulating the world of Distributed Ledger Technology (DLT), Initial Coin Offering (ICOs), crypto exchanges, Artificial Intelligence (AI) and FinTech. Its progressive laws have already made waves around the world with many companies transferring their offices to the island.

This phenomenon has started to provide many opportunities within the industry, so that many Maltese companies have also started to delve into this sector, creating blockchain platforms to sell to companies, launching ICOs and investing in cryptocurrencies. Through this technological ecosystem, many industries got involved in this new sector of digital economy.

Today 1st November, the Maltese government has successfully enacted the two remaining bills to secure the DLT journey on the island. These laws are the Virtual Financial Assets Act, and the Innovation Technology Arrangements and Services Act respectively. While on the 5th of October during the Delta Summit, the Hon. Silvio Schembri launched the Malta Digital Innovation Authority Act.

This rollercoaster ride started in March 2018, when the Junior Minister for Financial Services, Digital Economy and Innovation declared that the Maltese government was looking into ways to regulate the DLT space. A public consultation was organised inviting and appointing prominent key stakeholders in the industry, aiding the government to draft the three laws for further clarifications. E&S Group along with other legal companies participated in this consultation pushing toward a friendly, clear and well-regulated digital industry.

On the 24th of April 2018, Hon. Silvio Schembri presented the 1st reading of the 3 bills in parliament for further amendments. The outcome was successful, as both sides of the house approved and supported this new legislation.

The Virtual Financial Assets Act was published on the 22nd of May 2018. This Act brought further clarifications as to where Malta is set to move with its regulations of ICOs, crypto exchanges and how the appointed authority has to act in order to help regulate this sphere.

During the launching of the Delta Summit on May 22nd, the Maltese Parliament published the three final DLT laws online, indicating what is expected to be regulated. This brought about a lot of noise around the world. Many crypto exchange companies started to move their offices to Malta. Moreover, the Maltese public transport took a stance to partner with Omnitude, a blockchain company to start a partnership agreement to develop a blockchain-based middleware technology for the Malta Public Transport Service.

The Maltese government unanimously passed the third reading of the 3 DLT regulations on the 4th of July. On that same day, the MFSA published their consultation paper to regulate the Virtual Financial Assets Act (VFAA). These laws caused interest from many legal firms wanting to know more on how to help their clients pass their regulating test and become licensed to operate in Malta. The MFSA created the Virtual Financial Agent as presented in the VFA law. All licensed agents are required to assist ICOs and crypto exchanges to become licensed by the authority.

Through this wave of clear DLT legislation technology, Maltese companies such as E&S Group have found a perfect opportunity to do something different. In March 2018, E&S Group became the first legal and corporate firm to tokenise its services. This gave clients the opportunity to pay for legal and corporate services with ESTS tokens, created by E&S Group.

Malta has taken a big leap of faith in the industry becoming the first to provide friendly yet well-structured laws to regulate the technology. This will provide a better opportunity for enterprises to trust in the “Blockchain Island”, thus becoming a hub for ICOs, Blockchain, Fintech and other innovative economy sectors.

If you would like to know more about the benefits Maltese legislation offers in the sector of digital economy, please contact us on [email protected]. Our professional and dedicated team will help you better understand the Blockchain industry in Malta. E&S Group will ‘make things happen.’

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1st of November – Maltese Regulation Comes into Force

Categories Blockchain, Cryptocurrency, ICOs, Malta, Law, The Blockchain Island, DLT Regulation, E&S Group, MFSA, VFA Act, DLT

1st of November – Maltese Regulation Comes into Force

Since March, the Maltese government has begun discussing the ways to regulate the Distributed Ledger Technology (DLT) and the related digital space, including Initial Coin Offerings (ICO), cryptocurrency exchanges, Blockchain based companies, FinTech and Artificial Intelligence (AI). Through this progressive approach taken by the authorities, many big corporations namely, Binance, OKEx and Neufund have chosen Malta to be the place for business relocation. These companies have also helped the Maltese government to draft such progressive laws, encouraging more businesses to transfer their operations to the island. Prime Minister Dr Joseph Muscat tweeted that “[Malta’s] aim [is] to be[come] the global trailblazers in the regulation of blockchain-based businesses and the jurisdiction of quality and choice for world-class fintech companies”.

On the 4th of July 2018, the Maltese parliament unanimously passed three laws, namely: Malta Digital Innovations Authority (MDIA), Virtual Financial Assets Act (VFAA) and the Innovation Technology Arrangement and Services Act (ITAS). This was a success, making Malta a leader in this ever-growing industry, hence dubbed as “The Blockchain Island”.

The industries had been waiting for these laws to be implemented for a long time. Regarding the Innovative Technology Arrangements and Services Act, 2018 (ACT No. XXXIII of 2018) the Minister for the Digital Economy has established the 1st November 2018 as the date on which the provisions of the said Act shall come into force. In exercise of the powers conferred by article 1(2) of the Virtual Financial Assets Act (ACT No. XXXIII of 2018), 2018, the Parliamentary Secretary for Financial Services, Digital Economy and Innovation, in consultation with  Malta  Financial  Services  Authority,  has  established  the  1st November 2018 as the date on which the Act shall come into force.

The MDIA, which falls under the Malta Financial Services Authority (MFSA), has already been in operation.

What do the VFA Act and the ITAS Acts change?

One of the most important acts is the VFAA, as it regulates the whole Initial Virtual Financial Assets Offering and Virtual Financial Assets ecosystem and increases transparency requirements. The high-level principles and means of prosecution are applied to those who abuse market regulations, for example, by not adhering to the 5th anti-money laundering directive.

The VFAA covers the following; offering of VFAs, regulation of all services providers operating on the VFA space; licencing of all requirements and obligations of ICO issuers or those companies providing any kind of services to ICOs; structuring and implementing the financial instrument tests, identifying the minimum disclosure requirements for ICO whitepapers, control on marketing and advertisement of VFAs.

The law attests that every ICO better named by law as “initial virtual financial asset offering” or “initial VFA offering” needs to pass the Financial Instrument Test to be presented to the MFSA. The Financial Instrument Test is led by VFA Agents, which have to undergo a test to obtain a license from the respective authority. The law states that the VFA Agent is to be a source of guidance between the VFA issuer or the VFA service provider applicant, acting as a contact person between the MFSA and the client.

On the other hand, the ITAS is defined as “a regulatory framework which will be set up for the registration of Technology Service Providers (System Administrators and Auditors) and the certification of Technology Arrangements.” Its role is to “provide for the regulation of designated innovative technology arrangements referred to in the Act, as well as of designated innovative technology services referred to in the Act, and for the exercise by or on behalf of the Malta Digital Innovation Authority of regulatory functions with regard thereto.”

The ITAS provides a liaison with the MDIA. Its purpose is to seek all relevant authorisation by the MDIA.

Operating in Malta, E&S Group adheres to the Maltese laws with regards to ICOs, cryptocurrency exchanges and tokenomics. If you require further information contact us by sending an email on [email protected]. We make things happen!

 

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Malta – at the centre of the Distributed Ledger Technology

Categories Blockchain, Cryptocurrency, ICOs, Malta, Law, DLT Regulation, Smart Contracts, E&S Group, Technology, Cryptocurrency Exchange, Tokens, VFA Act

Malta – at the centre of the Distributed Ledger Technology

In the light of the new blockchain laws presented by the government of Malta, many fintech organisations praised the government’s progressive approach to these set regulations. The Malta Chamber of Commerce, Enterprises and Industry organised an interesting and detailed conference titled; ‘Blockchain: The New Regulatory Framework.’ E&S Group employees attended this conference to understand more about the three laws soon to be in force.

The Parliamentary Secretary for Financial Services, Digital Economy and Innovation, Hon. Silvio Schembri opened up the panel. He spoke about how Malta is becoming a Blockchain Island soon implementing laws that will ensure a safe crypto market on the island. Various influential people coming from various financial sectors spoke about the importance of blockchain technology. The discussion revolved around how the laws will help Malta in the sphere and being a trailblazer in the industry.

Many stakeholders coming from various industries in particular finance, legal, and IT attended the conference. Many interesting points came up during the discussions which brought about how private institutions are reacting to Malta’s DLT shift. In fact, some Maltese banks are welcoming ICOs as their clients. A bank, in particular, AgriBank has started to open up bank accounts to ICO clients. However, they have not started to accept cryptocurrency trading as it is still a bit of a grey area. Strict due diligence procedures also need to be followed by MLRO, making sure that all necessary AML procedures are in place. In addition, an MFSA representative spoke about the Financial Instrument test, VFA agents need to adhere to, presenting their final findings to the authority.

Since the industry is still in its initial stages, AML procedures need to be processed. In fact, the FIAU will have an important role to safeguard Malta’s reputation, seizing fraudulent companies from operating in Malta.

 

Are you looking for the best country to operate your ICO? Is Malta on your list and wish to know more what it offers? Check out the link here or send us an email on [email protected] or by calling us on +356 2010 3020. We make things happen!

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Is blockchain technology vital for ICOs to function?

Categories Blockchain, Cryptocurrency, ICOs, Malta, ICO Legal Service, E&S Group, Technology, Tokenomics, Advisory, Tokens, Utility Tokens, Security Tokens, Ethereum, VFA Act, ESTS Initiative

Is blockchain technology vital for ICOs to function?

Every Initial Coin Offering (ICO) works by means of blockchain technology. Subsequently, blockchain is the source that issue tokens, trade cryptocurrencies and aid miners to operate the platform. This technology is combining many industries both private and public to use this advanced system of collecting data.

ICOs and Tokens

Although blockchain can function on its own, it is widely used by ICOs. Many companies and startups are moving towards a blockchain era of things. A surge of investors are spending their money on various projects and digital currencies that are exceeding the market cap by trading volume. However, most ICOs issue their cryptocurrency by means of tokens. In reality, ICOs are projects that are designed by founders offering a service to their followers. Most companies opt for a blockchain based ICO to remove any third parties. Money needed to start off the project is collected by means of crowdfunding. Tokens, another word for cryptocurrencies are issued to whoever funds and supports the initiative.

What will happen when ICOs reach their Soft cap and Hard Cap?

During the Virtual Financial Assets (VFA)  offering stage, ICOs invest in their marketing projects to attract more investors. During the VFA offering process, ICOs would need to reach their soft cap and then the estimated hard cap. When the VFA offering ends, every ICO takes a different path. Some of the currencies end up on the market cap, trading their tokens with other cryptocurrencies while others continue with their intended project.

Blockchain a decentralised platform.

Blockchain is a decentralised platform for storing data. This new technology is becoming an important platform for processing transactions. Every transaction is verified by means of computer nodes connected to each other. Besides Bitcoin, new blockchain based cryptocurrencies started to take over the market. One of the most popular blockchain platform by far is the Ethereum platform. Created by Vitalik Buterin, the Ethereum platform has become the ideal platform since it is easy to set up. The Ethereum platform works via smart contracts. These digitalised contracts work to facilitate, verify or enforce the negotiation or performance of a contract. Meanwhile, these contracts eliminate the use of third parties. The majority of ICOs tend to use the Ethereum platform for smart contracts.

Legal advice to ICOs.

Despite the fact that ICOs require blockchain technology to work, legal advice is of the utmost importance. Signing up your ICO in a progressive jurisdiction such as Malta would help the project reach its final stages. An interdisciplinary firm based in Malta, E&S Group, offers an array of services assisting ICOs from their concept stage up the actual offering. Advisory service offered to prospective ICO clients are blockchain, tokenomics, taxation, and opening a Malta company, to name a few. To date, E&S Group has successfully advised over 40 ICOs, all reaching their hard cap.

Now is the chance to set up your dream ICO project in Malta. E&S Group will help you achieve your dream. For further information regarding our ICO Legal Service please click here.  Or contact us on +356 2010 302  or by email on [email protected]

If you have an upcoming ICO and would like to take part in ESTS Seed Competition, please follow this link to know what is required of you to participate.

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The MFSA published a Consultation Paper on Regulations under the VFA

Categories Malta, Law, E&S Group, Technology, Regulation, MFSA, VFA Act

The MFSA published a Consultation Paper on Regulations under the VFA

A consultation paper has been published by the MFSA proposing Regulations under the (VFA) Virtual Financial Assets Act. The report published on the 4th of July stated that since the Bill has reached its final enactment stages, the MFSA started drafting the legal notice setting out the regulations. The Authority addressed the following regulations being, exemptions, fees, control of assets and administrative penalties and appeals.

Through this consultation paper, the MFSA is seeking a constructive feedback from the industry regarding the draft regulations, the Virtual Financial Assets Regulations which will be issued under the Act. The aim of these regulations is to maintain financial stability, thus promoting market integrity and ensure the protection of the investor.

The MFSA Consultation Paper on Regulations under the VFA Bill goes public from July 4th until 20th July 2018.

 

If you would like to know more about the ICO Legal Services please contact us directly on +356 20103020 or by email at [email protected]  or by following this link.

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