Malta has introduced a regulatory framework for virtual financial assets (VFAs) under the Virtual Financial Assets Act (VFAA) and the Virtual Financial Assets Regulations (VFAR). The requirements for obtaining a VASP license in Malta may include the following:
- Incorporation: Establishment of a legal entity in Malta, such as a limited liability company, which will be the entity applying for the license.
- Fit and Proper Test: The individuals involved in the management and operation of the VASP must meet the “fit and proper” criteria, demonstrating competence, integrity, and sound financial standing.
- Capital Requirements: Maintaining the required minimum share capital as prescribed by the VFAA and VFAR. The specific capital requirements may vary depending on the services the VASP intends to provide.
- Compliance and Governance: Establishment of appropriate governance structures, policies, procedures, and systems to ensure compliance with anti-money laundering (AML) and counter-terrorism financing (CTF) regulations, data protection requirements, risk management, and customer due diligence obligations.
- Systems and Controls: Implementation of robust technology systems, security measures, and internal controls to safeguard virtual assets and protect against cybersecurity risks.
- VFA Agent: Appointment of a VFA Agent, who is a legal practitioner or a firm providing legal services in Malta, to assist with the application process and liaise with the Malta Financial Services Authority (MFSA) on behalf of the VASP.
It is important to note that the licensing process can involve additional requirements, documentation, and ongoing obligations that may vary depending on the specific circumstances and the type of VASP services being offered. To ensure accuracy and completeness, it is advisable to refer to the official guidelines provided by the MFSA or consult with legal professionals experienced in Maltese financial regulations.
The Virtual Financial Assets Regulations (VFAR) in Malta provide a regulatory framework for Virtual Asset Service Providers (VASPs) operating in the virtual financial asset (VFA) sector. When working with the VFAR as a VASP, several key aspects of the regulatory environment should be considered.
Firstly, VASPs in Malta are required to obtain a license from the Malta Financial Services Authority (MFSA) to offer VFA-related services. This licensing process involves meeting specific criteria, including incorporating a legal entity in Malta, demonstrating the fitness and propriety of individuals involved, and fulfilling capital requirements.
VASPs must adhere to robust compliance and governance measures. This includes implementing policies, procedures, and systems to ensure compliance with anti-money laundering (AML) and counter-terrorism financing (CTF) regulations. VASPs are also expected to follow data protection requirements, maintain appropriate risk management frameworks, and conduct thorough customer due diligence.
To safeguard virtual assets and mitigate cybersecurity risks, VASPs are obligated to establish and maintain secure technology systems, implement internal controls, and maintain adequate security measures. These measures help protect against unauthorized access, hacking, and other potential vulnerabilities.
The VFAR also emphasizes the role of a VFA Agent, who acts as a liaison between the VASP and the MFSA. The VFA Agent assists with the licensing process, ensures ongoing compliance, and facilitates communication with the regulatory authority.
The regulatory environment for VASPs under the VFAR is designed to foster transparency, integrity, and investor protection in the virtual asset space. VASPs are expected to operate with a high degree of professionalism, maintaining strict compliance with regulatory requirements and fulfilling their obligations to protect the interests of their clients and the integrity of the financial system.
With a Virtual Assets Service Providers (VASPs) license in Malta, you can engage in a range of activities related to virtual assets and cryptocurrencies. The license allows you to operate as a regulated entity within the Maltese jurisdiction, subject to the requirements and conditions set forth by the Malta Financial Services Authority (MFSA).
Here’s an overview of what you can do with a VASP license in Malta and the benefits it offers:
Virtual Asset Exchange Services: As a licensed VASP in Malta, you can operate a virtual asset exchange platform, facilitating the buying and selling of cryptocurrencies and virtual assets. This includes providing a secure and regulated environment for users to trade virtual assets.
Virtual Asset Wallet Services: Holding a VASP license enables you to offer virtual asset wallet services to your clients. This involves safeguarding and managing clients’ virtual asset holdings, providing secure storage solutions, and facilitating transactions on their behalf.
Virtual Asset Transfer Services: VASP licenses allow you to provide services for transferring virtual assets between users, both within Malta and internationally. This includes facilitating peer-to-peer transfers and ensuring the secure and efficient movement of virtual assets.
Compliance with AML and KYC Regulations: VASP licenses in Malta require compliance with stringent anti-money laundering (AML) and Know Your Customer (KYC) regulations. Holding a license demonstrates your commitment to upholding high compliance standards, ensuring the integrity of your operations and protecting against financial crimes.
Enhanced Credibility and Trust: Operating with a VASP license in Malta enhances your credibility and instills trust among clients and partners. Being regulated by the MFSA demonstrates your commitment to transparency, accountability, and consumer protection, setting you apart from unregulated market participants.
Access to Banking Services: Holding a VASP license in Malta may facilitate access to banking services, payment systems, and other supporting services. This is crucial for establishing banking relationships, enabling seamless fiat currency transactions, and ensuring the smooth operation of your virtual asset services.
Passporting Rights: Malta is a member of the European Union (EU) and enjoys passporting rights within the EU’s Single Market. This means that with a VASP license in Malta, you may have the opportunity to provide services to customers in other EU member states without the need for additional licenses, subject to certain conditions.
Business Expansion Opportunities: Malta has positioned itself as a global hub for the blockchain and virtual asset industry. Holding a VASP license in Malta opens doors to business expansion and partnership opportunities within the thriving Maltese ecosystem. The government has shown interest in promoting Malta as a “Blockchain Island” and has introduced initiatives to attract blockchain and crypto-related businesses. This includes the establishment of the Malta Digital Innovation Authority (MDIA) and the development of the Digital Innovation Framework. It allows you to tap into a supportive regulatory environment, access a skilled workforce, and benefit from Malta’s favorable business climate.
Tax Incentives: Malta offers a favorable tax regime for certain types of businesses, including VASPs. The country has a participation exemption regime, which means that dividends and capital gains from qualifying investments may be eligible for tax exemptions or reduced rates. However, it is important to consult with tax professionals to understand the specific tax incentives and requirements applicable to VASPs in Malta.
Looking to obtain a Virtual Assets Service Providers (VASP) license in Malta?
With our deep expertise and knowledge of Malta’s regulatory landscape, Porat Group offers comprehensive and personalized services that make the licensing process seamless and efficient. Our team of experienced professionals understands the intricate requirements and can navigate the complex VFA framework with ease, ensuring your compliance and peace of mind. By choosing Porat Group, you gain access to a network of industry professionals, regulatory insights, and a proven track record of success. With our client-centric approach, we provide tailored solutions, saving you time and resources while maximizing your chances of obtaining a VASP license.
Porat Group’s teams also adds value in terms of:
- Assistance with hiring management and staff;
- Finding and connecting to technologies and platforms;
- Assistance with opening accounts in acquiring banks (which are necessary for operations);
- Acting as a potential partner when it comes to referring clients/merchants
Written by David Woliner, Adv.
Head of Financial Regulation.