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MFSA requests consultation on ICO Financial Instrument test in Malta
16/04/2018
MFSA requests consultation on ICO Financial Instrument test in Malta

MFSA requests consultation on ICO Financial Instrument test in Malta. The test would determine whether a Distributed Ledger technology (DLT) asset falls under the EU and traditional financial regulation of Malta’s suggested Virtual Financial Assets Act (VFAA).

16 April, AtoZ Markets – The Malta Financial Services Authority (MFSA), the key financial regulator of Malta, has issued a consultation paper on the potential introduction of a “financial Instrument test”. The test would officially define virtual tokens, as stated on the MFSA’s website.

MFSA requests consultation on ICO Financial Instrument test in Malta

The proposed Financial Instrument Test has been firstly proposed on the 30th of November in the paper on the Initial Coin Offerings (ICOs), cryptocurrencies, and related services providers. The test would determine whether a Distributed Ledger technology (DLT) asset falls under the EU and traditional financial regulation of Malta’s suggested Virtual Financial Assets Act (VFAA).

As a response to positive feedback in regards to the Financial Instrument Test, the regulator has stated in their circular that they are “considering the introduction of the Test as a mandatory requirement under the VFAA, applicable both within the context of an Initial Coin Offering (‘ICO’) as well as during the intermediation of DLT assets.”

The latest paper from the MFSA highlights that the regulator is “seeking feedback from the industry” prior to establishing the final version of the test. The public can still express their opinions via a survey until 4th of May.

Malta to become a Blockchain Island

As of the moment, Malta is building a reputation to become the “Blockchain island” via forming crypto-friendly regulatory framework. This February, Maltese government has released a document “Malta – A leader in DLT Regulation.” The officials proposed the Malta Digital Innovation Authority Bill and the VFAA to bring crypto-related entities and dealings to the market.

In the meantime, two of the major cryptocurrency exchanges, Binance and OKEx have decided to expand their operations to the island.

OKEx has written in their press release that after the meeting with the regulators from Malta in regards to the regulator cryptocurrency framework, they are “confident in the Malta government’s approach and decided to make Malta a foundation for further OKEx growth.”

Maltese authorities have been quite active in their attempts to provide a legal framework for the distributed Ledger Technologies. One of the documents from the government is related to the enforcement of three proposed legislation pieces.

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