Malta Embraces EU’s MICA Regulations: Public Consultation Open Until Sept. 29

On Sept. 18, Malta’s Financial Services Authority (MFSA) initiated a public consultation to harmonize its crypto regulations with Europe’s Markets in Crypto-Assets (MICA) regulations, slated to become effective in December 2024.

On Monday, Malta’s Financial Services Authority (MFSA) initiated a public consultation on proposed changes to its regulatory framework for crypto companies, which will run until Sept. 29.

These changes are aimed at aligning Malta’s rules for crypto exchanges, custodians and portfolio managers with the regulations outlined in the European Union’s MiCA framework.

One notable proposal is the requirement for crypto providers to establish an “orderly wind-down plan,” ensuring a structured approach during business discontinuation.                                        

In 2018, Malta, known as the “Blockchain Island,” established itself as a pioneer in the cryptocurrency and blockchain space by launching the Virtual Financial Assets (VFA) framework. This framework was designed to provide regulatory support for all digital financial assets, including cryptocurrencies.

Recognizing the dynamic nature of the crypto space, Malta has consistently adapted its crypto regulations over the years. It has introduced new MiCA regulations in the EU to align regulations for exchanges, custodians, and portfolio managers with the European Union’s MiCA standards.

They include the removal of the systems audit requirement for VFA license holders and simplifying compliance. Furthermore, capital requirements for Class 3 and Class 4 licenses have been reduced to $133,000 (125,000 euros) and $159,000 (150,000 euros), respectively, making licensing more accessible. 

Professional indemnity insurance requirements have also been eliminated, and outsourcing requirements have been updated to align with EU regulations. 

The proposed adjustments by the MFSA under the MiCA regulation entail integrating service-specific rules for entities like VFA exchanges and guidelines for order execution and client suitability.

Simultaneously, client categorization prerequisites and the obligation for a Risk Management and Internal Capital Adequacy Assessment Report will be eliminated.

These measures are geared towards reducing administrative complexities for crypto businesses, with the ultimate goal of cultivating a more conducive regulatory environment for the crypto industry in Malta.

Malta Adapts Regulations in Anticipation of EU’s MiCA Implementation for Crypto Industry

On May 31, the European Union officially enacted the Markets in Crypto-Assets (MiCA) rules, establishing a comprehensive regulatory framework for cryptocurrencies.

The legislation was signed into law by European Parliament President Roberta Metsola and Swedish Rural Affairs Minister Peter Kullgren. This move follows a successful vote in the European Parliament in April.

In conjunction with MiCA, a separate law has been enacted to combat money laundering, including the prohibition of anonymous crypto transactions exceeding €1,000 ($1,070).

This development positions the EU as the first major jurisdiction to implement a regulatory framework for the crypto industry, providing the much-needed clarity sought by many firms in the sector.

The anticipated activation of MiCA by December 2024 signifies a pivotal shift in the existing framework, aligning it with other cryptocurrencies and related services across the European Union. This strategic move reflects Malta’s commitment to harmonizing with evolving EU-wide crypto regulations.

The decision by Malta’s Authority to align its regulations with the European Union’s Crypto framework demonstrates a proactive approach. Instead of waiting 18 months for MiCA implementation, Malta has adapted its existing rules to align with the EU’s standardized regulations.

Notably, fellow EU member France is also actively reshaping its crypto regulatory landscape in preparation for the forthcoming MiCA implementation in early 2024.

This synchronized effort by two leading European nations underscores the continent’s dedication to creating a secure and well-regulated crypto environment.