Malta has established itself as a prime fintech hub for over a decade by attracting to the island a large number of electronic money institutions and payment service providers, as well as having developed into the world’s largest iGaming hub.
This led Malta to invest heavily in its IT infrastructure and has drawn a large proportion of senior IT talent to the island. This experience in a tech based, high-risk industry positioned Malta perfectly to capitalise on the rise of distributed ledger technology (DLT).
Malta’s progressive attitude towards DLTs (including blockchain) and cryptocurrencies has already attracted some of the world’s largest crypto-exchanges who have either relocated to or commenced additional operations in Malta.
Malta has sought to create a regulated framework for innovative technology that is built upon three pillars: consumer protection, market integrity and financial stability. This comprehensive legal framework is a world first and was eagerly anticipated by fintech experts, operators and investors.
Malta has established itself as a prime fintech hub for over a decade by attracting to the island a large number of electronic money institutions and payment service providers, as well as having developed into the world’s largest iGaming hub.
This led Malta to invest heavily in its IT infrastructure and has drawn a large proportion of senior IT talent to the island. This experience in a tech based, high-risk industry positioned Malta perfectly to capitalise on the rise of distributed ledger technology (DLT).
Malta’s progressive attitude towards DLTs (including blockchain) and cryptocurrencies has already attracted some of the world’s largest crypto-exchanges who have either relocated to or commenced additional operations in Malta.
Malta has sought to create a regulated framework for innovative technology that is built upon three pillars: consumer protection, market integrity and financial stability. This comprehensive legal framework is a world first and was eagerly anticipated by fintech experts, operators and investors.
Country Highlights
| GDP GROWTH: 6.6% in 2017 |
REGULATORS: Malta Financial Services Authority, Malta Digital Innovation Authority |
| TIMEZONE: Central European Time Zone (UTC+01:00) |
FINANCIAL SERVICES FRAMEWORK: EU and OECD approved |
| FINANCIAL SECTOR: 25% Annual Growth |
FINANCIAL TECHNOLOGY LAW: First in World |
Legal Basis
The legal framework specifically designed by the Government of Malta to regulate virtual financial assets (VFAs) and virtual financial assets related services (VFA Services) comprises a series of three laws:
the Malta Digital Innovation Authority Act ((MDIA Act) establishing the Malta Digital Innovation Authority (MDIA);
the Innovative Technology Arrangements and Services Act (ITAS Act) providing for registration of technology service providers and the certification of technology arrangements; and
the Virtual Financial Assets Act (VFAA) mainly regulating initial coin offerings (ICOs), VFA service providers and VFA agents.
Under the VFAA, no person can provide a VFA service in or from within Malta unless licensed by the Malta Financial Services Authority (MFSA) prior to commencing operations.
The MFSA is the lead regulator for VFAs and VFA service providers. However, certain innovative technology arrangements, including DLTs and smart contracts may be referred to the Malta Digital Innovation Authority for further certification.
If the DLT assets to be traded or dealt with enter the sphere of other regulated activities, such as securities or iGaming, then more regulators will be called into play. The different regulators work well together and share the vision of promoting Malta as a safe, regulated environment in which this industry may thrive.
Benefits
- Rules and Documentation in English
- Consumer Protection,
- Market Integrity and Financial Stability
- Pragmatic Regulator Reputable Jurisdiction
- Attractive Passporting
- Corporate Tax Regime
Eligibility
- Undertake Fit & Proper Test
- Physical Presence
- Appoint a VFA Agent
- Initial Share Capital, Capital
- Adequacy and Liquidity Requirements
- Undertake the Financial Instrument Test
Types of Licenses & Services
The VFAA regulates a whole range of service providers and services provided in relation to VFAs covering reception and transmission of orders, execution of orders on behalf of others,
dealing on own account, portfolio management, custodian and nominee services, investment advice, VFAs placements and the operation of a VFA exchange. These services are classified in four classes as shown in the table below.
Class of Licence, Application and Supervisory Fee
The licence application fees and annual supervisory fees vary by class of licence as per the table hereunder:
| Licence Class |
Description of permissible activities |
Minimum Share |
Application Fee |
Annual Supervisory Fee |
| Class 1 |
May: receive and transmit orders, provide investment advice and/or the placing of virtual financial assets
May not: hold or control clients’ assets or money, deal on own account and/or act as a VFA exchange.
|
€50,000 or €25,000 + PI |
€6,000 |
€5,500 for revenue of €50,000, then + €700 for every further tranche of €50,000 up to maximum of €1,000,000
|
| Class 2 |
May: receive and transmit orders, provide investment advice, placing of virtual financial assets and/or hold or control clients’ assets or money.
May not: deal on own account or act as a VFA exchange. |
€125,000 |
€10,000 |
€9,000 for revenue of €250,000 then + €800 for every further tranche of €250,000 up to maximum of €5,000,000 |
| Class 3 |
May: receive and transmit orders, provide investment advice, placing of virtual financial assets, hold or control clients’ assets or money and/or deal on own account
May not: act as a VFA exchange. |
€730,000 |
€14,000 |
€12,000 for revenue of €250,000 then + €800 for every further tranche of €250,000 up to maximum of €50,000,000 |
| Class 4 |
May: receive and transmit orders, provide investment advice, placing of virtual financial assets, hold or control clients’ assets or money, deal on own account and/or act as a VFA exchange. |
€730,000 |
€24,000 |
€50,000 for revenue of €1m, then + €5,000 for every further tranche of €1m up |
Process & Timeline
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