The countries of the European Union hold a patchwork of individual attitudes towards cryptocurrency regulation, but all of them also fall under the jurisdiction of the EU Commission. For EU regulations, please visit EU Laws Related to Token Sales, Blockchain, and Digital Proof.
Malta has positioned itself as a country of choice for cryptocurrency companies, coming to be known as the “world’s first blockchain island”. In fact, on July 4, 2018, Malta’s government passed 3 laws so companies can easily issue new cryptocurrencies and trade existing ones:
In July 2018, parliament has introduced a financial instrument test, which classifies a DLT asset as electronic money, financial asset, a virtual financial instrument, or a virtual token.
As of March 2018, cryptocurrencies are unregulated under Maltese law and exchanges of cryptocurrencies (for other cryptocurrencies or for fiat currency) are deemed equivalent to commodity trading. A company utilising virtual currencies is currently not required to obtain a licence from the Malta Financial Services Authority (MFSA) unless it qualifies as a collective investment scheme or carries on the business of a financial institution or payment service provider, in which case the company would need to be appropriately licensed in terms of the Financial Institutions Act. Moreover, digital coins are not considered as being investment instruments under the Investment Services Act at present, and so investment activities related to cryptocurrencies would not trigger any licensing requirements in terms of this act. It is worth noting that the MFSA has recently issued a consultation document in relation to the proposed regulation of the investment in cryptocurrencies by specific legal entities.
With respect to legal perspectives, investors should be wary of potential pitfalls such as fraudulent crowdfunding schemes or ICOs and securities fraud. The fact that transactions involving cryptocurrencies cannot be reversed once executed (at least at this stage) coupled with the anonymity enjoyed by parties to such dealings regrettably present attractive opportunities for illegal activity. Another issue which may further complicate matters in relation to cross-border cryptocurrency transactions would be the potentially different classification and regulatory requirements to which such transactions may be subject.
In July 2018, Malta Financial Services Authority (MFSA), opened a consultancy to make sure all the stakeholders in the blockchain community understand what its three blockchain and crypto laws passed recently mean.
Malta is arguably the first country that has created a custom made regulatory system for blockchain-based ventures in July 2018. The VFA Act introduced a new regulatory body that would look upon the sector, the Malta Digital Innovation Authority Act (MDIA), Innovation Technology Agreement and Services Act (ITAS). The country’s parliament has also introduced a financial instrument test, which classifies a DLT asset as electronic money, financial asset, a virtual financial instrument, or a virtual token. The publication of these laws in the country’s gazette has to wait as the regulators are working on a framework to implement them. The MFSA, meanwhile, has been seeking stakeholder opinions on the same. These relate to the exemption of fees and administrative penalties under the VFA Act. This consultation period is set to end on 27th July. After that, the MFSA will be regulating the final rules and regulations for the VFA Act.
In 2018.12.18 ##STRUCTURE OF THE ISSUER OF THE ICO The regulations stipulate the following general requirements which must be met at all times by the Issuer of the VFA. In essence, by law, it is important that the Issuer:
##REQUIREMENT OF A WHITEPAPER The law prescribes that a whitepaper which will be registered and in effect approved by MFSA is compulsory in order for an issuer to:
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