Category: MFSA

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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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MFSA organised a seminar titled: Due Diligence and Cybersecurity in Relation to DLT

Categories Blockchain, Cryptocurrency, Regulatory, Malta, The Blockchain Island, DLT Regulation, Smart Contracts, Technology, Trading, Regulation, Artificial Intelligence, Tokens, Conference, MFSA, DLT, Privacy

MFSA organised a seminar titled: Due Diligence and Cybersecurity in Relation to DLT

 

Last Tuesday, 11th September, MFSA organised a day seminar for those who work in the field of DLT and Fintech which took place at Corinthia Palace Attard. The seminar titled ‘Due Diligence and Cybersecurity in Relation to DLT’, discussed many challenging issues that the DLT is facing. Many topics were discussed during this seminar, with a particular focus on cybersecurity, hacking and fraud.

E&S Group was represented by its team who gained a better insight into this ever-growing space.

Speakers from around the world, (most notably coming from France, Germany, England and the USA), attended the seminar. They spoke about their concern about hackers’ attacks which are made every day, and also covering the topic of frauds. In fact, in the past few years, many banks have experienced some kind of attack, with the consequence of losing their customers’ money. As a result, this has made the DLT space to look like a high-risk sector. However, everyone working in a network is subjected to an attack. The speakers all agreed that the blockchain technology needs to implement some sort of due diligence on the platform, preventing any hacks and tarnishing the sector further.

Moreover, it was discussed that crypto investors should conduct a due diligence procedure, helping banks and exchanges to identify who is fraudulent or not. Those institutions that do not follow any due diligence procedures are subjected to hackers accessing customers’ wallets, thus resulting in the bankruptcy of the company. In order to prevent such theft in the sector, cryptographers are creating complex algorithms to prevent such wrongdoings. This will help maintain the system to stay safe in combination with constant checks done to make sure no access is given to intruders. Mrs Maria Vello from Cyber Defence Alliance pointed out that that hackers are not anonymous and many criminals who stole money from banks have been caught by police.

VFA Agents in DLT

The event also highlighted the importance of VFA Agents. Accountants, auditors and lawyers who are applying to become a licenced VFA Agents have to go through a rigorous procedure, including, an exam, an interview and the applicable due diligence. The MFSA stated that this procedure is important to eliminate any “bad practises” within the industry. Moreover, the licenced VFA Agents need to conduct the Financial instrument test on their clients, thus presenting all the required information, one of which being the white paper, to the authority.

Malta has become the leading jurisdiction to have a friendly approach on DLT sector. At E&S Group we have helped over 80 ICOs to launch their project in Malta. If you would like to join these companies but require further advice, please contact us at [email protected] or by telephone on +356 2010 3020. We make things happen!

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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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