Malta enhances crypto regulations in preparation for EU’s MiCA

Posted: September 19, 2023

• MiCA will allow service providers to operate throughout the EU under a single license.
• The specific rule adjustments being considered in the consultation are geared toward exchanges, custodians, and portfolio managers.

Malta’s Financial Services Authority (MFSA) is taking steps to revise its regulatory framework for crypto companies. This move comes as it prepares to align itself with the European Union’s (EU) forthcoming Markets in Crypto Assets regulation (MiCA). Note that the MiCA is scheduled to come into effect in 2024.

The MFSA initiated a public consultation on proposed rule changes that will impact crypto exchanges, custodians, and portfolio managers. These adjustments aim to bring Malta’s regulations in line with MiCA, with a focus on ensuring crypto providers establish “an orderly wind-down plan.”

MiCA will be the world’s first comprehensive set of rules governing crypto assets in a significant jurisdiction. Furthermore, it will allow service providers to operate throughout the EU under a single license. Given its EU membership, Malta is keen to harmonize its crypto regulations with MiCA to guarantee a smooth transition for Virtual Financial Assets (VFA) Service Providers operating within the country. The MFSA opened this consultation process to the public, and it will remain active until 29 September.

MFSA’s public consultation to meet MiCA standards

Malta has been proactive in developing a relatively advanced legal framework for crypto-related activities, mirroring EU standards. Additionally, the nation has become a hub for various crypto firms. These include well-known names like Crypto.com and OKCoin.

Furthermore, the proposed regulatory changes are intended to reinforce Malta’s position as a crypto-friendly jurisdiction. Furthermore, they are aligned with EU regulations and ready to accommodate businesses in the evolving digital asset landscape.

MiCA, slated for implementation in 2024, represents a significant milestone in crypto regulation. Malta aims to ensure that its crypto industry operates under a comprehensive and consistent regulatory framework. Additionally, the country aims to do so by adhering to its standards. This approach will likely attract more crypto businesses to the island nation. Thus, fostering growth and innovation in the sector.

The specific rule adjustments being considered in the consultation are geared toward exchanges, custodians, and portfolio managers operating within Malta’s crypto ecosystem. These entities will need to make necessary adaptations to their operations to align with MiCA and ensure compliance with the new regulatory requirements. As the consultation period progresses, it will be essential for all relevant stakeholders to participate and provide their perspectives.

Malta, known as the “Blockchain Island,” has become a global leader in cryptocurrency regulation. It also offers a favorable tax environment and clear guidelines through the Virtual Financial Assets Act. Furthermore, individual investors enjoy tax exemptions on capital gains, while businesses benefit from a 35% corporate tax rate and regulatory oversight from the Malta Digital Innovation Authority.

Malta’s regulatory framework has attracted crypto companies like Crypto.com and OKCoin, positioning it as a crypto-friendly jurisdiction. More recently, France amended its registration requirements for crypto platforms ahead of MiCA implementation across Europe.