Malta – Virtual Financial Asset Services – The New Legislation – Fin Tech


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Blockchain technology has revolutionized the way of doing business globally. In fact, like investment services, a number of ancillary business activities are now connected to the industry, ejecting Blockchain technology into endless realms of daily life.

Instead of shitting away from the technological challenge, the Maltese government has passed legislation that regulates the offering of certain services (known as virtual financial asset services) to cryptocurrencies, which includes the operation of platforms for trading these cryptocurrencies, portfolio management and providing investment advice. among others. This makes Malta a pioneer in this sector and provides legal certainty, so much so that following such a commitment from the government, crypto giants are already relocating to Malta, seeking to benefit from a regulated environment and a favorable tax rate.

This post actually aims to provide an overview of recent laws and regulations related to virtual financial asset services (i.e. VFA services).

The scope of this brochure is limited to VFA services. Initial Coin Offering (ICO) information is covered in our brochure: “Malta – ICO – The new legislation”.


The legislation applies to anyone who intends to provide a virtual financial asset (VFA) service to or from Malta.

For a person to provide a VFA service, the following conditions must be met:

  1. A license duly issued by the Malta Financial Services Authority (MFSA);

  2. Have at all times a VFA agent, duly authorized by the MFSA.

At this point, it is crucial to point out that at the time of publication of this brochure, the new legislation and relevant MFSA rules are still in draft form.


By definition, a VFA is any form of digital media record that is used as a digital medium of exchange, unit of account, or store of value and is not one of the following as defined below:

  1. Electronic money;

  2. financial instrument; and

  3. Virtual token.

Legal definitions of the above:

Electronic money means monetary value stored electronically, including magnetically, represented by a claim on the issuer which is issued upon receipt of funds for the purpose of carrying out payment transactions (as defined) and which is accepted by a natural person or legal entity other than the financial institutions that issued the electronic money.

Financial instrument includes the following:

  • Transferable securities, including stocks and bonds;

  • Money market instruments such as treasury bills and certificates of deposit;

  • Units of an undertaking for collective investment;

  • Options, futures, swaps and any other derivative contract relating to transferable securities, currencies, interest rates, yields, commodities or traded on a regulated market, etc. ;

  • Credit risk transfer derivatives;

  • Rights under a contract for difference;

  • Instruments that confer property rights;

  • Foreign currency held for investment purposes; and

  • Emission allowances under the EU Emissions Trading Scheme.

Virtual tokens have been defined as a form of digital media recording that:

  1. has no utility, value or application outside of the DLT platform on which it was issued; and

  2. can only be exchanged for funds on this platform directly by the issuer of this DLT asset.

Electronic money is excluded from this definition.

The MFSA proposes a requirement Financial instrument test to determine whether an asset is a financial instrument or not.

The process is a two-part test, being:

  1. Is the VFA considered a virtual token as defined by the new laws? If so, given its restricted definition under the new laws specified here, then it is exempt under the new VFA and licensing requirements do not apply.

  2. If it does not qualify as a virtual token, it must then be determined whether it qualifies as a financial instrument within the meaning of MiFID (section C, appendix 1) taking into account all the categories of financial statements identified below. above. If the answer is negative, then the asset is supported by the VFA and its authorization procedure must be followed.

In summary

If a cryptocurrency is considered a virtual token as defined in the new law and is not considered a financial instrument or electronic money, then it is exempt from the scope of the new law and the requirements of license are not necessary for its issuance or trade.


In order to determine whether the service concerned is regulated, the definition of a VFA service must be analyzed. This is crucial in determining whether or not a license is required.

VFA Services have been defined by law as being:

  • Receipt and transmission of orders – The receipt by a person of an order to buy, sell or subscribe to virtual financial assets and the transmission of this order to a third party for execution;

  • Execution of orders on behalf of other persons – Act to enter into agreements to buy, sell or subscribe to one or more virtual financial assets on behalf of other persons;

  • Deal for own account – Negotiation using own funds to conclude transactions on one or more virtual financial assets;

  • Portfolio Management– Manage assets owned by another person if those assets include a VFA or if the manager has the discretion to invest any of the assets in a VFA;

  • Custodian or agent services a VFA or a private cryptographic key;

  • investment adviceand buy/sell/subscribe/exchange/redemption recommendations etc. to potential investors in the context of a VFA;

  • Installation of VFA – The marketing of newly issued VFAs or virtual financial assets already issued but not admitted to trading on a DLT exchange, to specific persons and which does not involve an offer to the public or to existing holders of the virtual financial assets of the issuer of the assets;

  • Operation of a VFA Stock Exchange.

To read this report in its entirety, please click here.

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.


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