With the fast pace of technological development in the world, Malta aims to become the first country in Europe to regulate virtual currencies. Changes are inevitable, and constant development needs to be embraced and adapted to. Especially for Malta being an iGaming and financial services hub, virtual currency can’t be ignored, therefore authorities representing the industries which are directly effected by technological development, and virtual currencies in particular, had to take this matter seriously, especially considering possible involved risks.
Malta Financial Services Authority has launched a consultation paper on the regulatory framework for regulation of virtual currencies. The paper proposes rules and policies to be introduced to ensure market integrity and investor’s protection.
Guidelines are being developed to regulate PIFs (Professional Investor Funds), which objective is to invest in virtual currencies. Furthermore, the Authority is considering a possibility of AIFs (Alternative Investment Funds) to be able to invest into virtual currencies.
Considering the risks associated with the collective investment schemes including virtual currencies in their portfolios, the Authority decides that structures for PIFs opting for such investments should be limited to SICAV and INVCO structures. Reason for such decision being that such structures are required to have a board of Directors caring the responsibility for the overall conduct of business of these collective investment schemes.
The consultation paper is primarily developed on the existing background of rules applicable to PIFs, adding further rules which are designed specifically to limit and mitigate the risks associated with virtual currencies and investment in such. The proposed framework primarily aims at protecting the investors’ interests through imposing specific requirements on governing authorities of the collective investment schemes, as well as collective investment schemes’ service providers in relation to risk warnings, quality assessment, risk management and required competence level, besides others.
Proposals are still subject to revision based on the feedback to be received from the stakeholders of the industry. Stakeholders are to submit their feedback for further consideration by the Malta Financial Services Authority by no later than 10th November, 2017.
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