A Turkish entity can be registered by a non-resident of any nationality. Thus it can be wholly...
Malta is considered one of the jurisdictions that set up the regulatory framework for Blockchain, DLT (Distributed ledger Technology), cryptocurrency and digital assets. The country aims to recognise itself as the pioneer in the crypto hubs by adopting Crypto-friendly regulations. The Virtual Finance Act 2018 governs the country’s digital laws. They aim to provide a smooth regulatory framework to make Malta the leading country in blockchain technology. The present article will discuss the steps and the regulatory requirement for starting a business of Cryptocurrency in Malta.
The laws regulating cryptocurrency in Malta are:
The VFA is a form of digital technology that is used as a medium of exchange, store of value, unit of accounts and doses not contains:
Any company willing to offer a VFA to the public in or from Malta shall require to draw a white paper. The whitepaper shall be filed under the following conditions:
Any company willing to offer VFA to the public shall appoint a VFA agent who will handle all the correspondence with the regulatory authority. For carrying on the below-mentioned activities, the agent is required to be registered with the competent authority by filing an online VFA agent registration form:
The company willing to start a business in cryptocurrency shall choose from the types of classes they want to engage in the business activities. The VFA Act determines the types of cryptocurrency according to the activities.
|Type||Purpose||Capital Requirements and Fees|
|Class 1||A company is willing to open an advisory service relating to cryptocurrency investments.||Capital requirements:- EUR 50,000 or EUR 25,000 with VFA insurance Application Fee: EUR 6,000 Annual Supervisory Fee: EUR 5,500 for the first generated revenue of EUR 50,000 and EUR 700 for each additional part till revenues amount to EUR 1,000,000.|
|Class 2||A company is willing to provide a digital wallet and looking to manage cryptocurrency portfolios. They can hold and control the money of the investor.||Capital requirements:- EUR 125,000 Application Fee: EUR 10,000 Annual Supervisory Fee: EUR 9,000 for the first generated revenue of EUR 250,000 and EUR 800 for each additional part till revenues amount to EUR 5, 000,000.|
|Class 3||A company is willing to operate as a trader over the counter on the cryptocurrency market. They can use any VFA service and hold control money of the investor.||Capital requirements:- EUR 730,000 Application Fee: EUR 14,000 Annual Supervisory Fee: EUR 12,000 for the first generated revenue of EUR 250,000 and EUR 800 for each additional part till revenues amount of EUR 50, 000,000|
|Class 4||A company is willing to offer VFA and DLT assets on the cryptocurrency exchange. They can hold and operate VFA cryptographic keys and manage their VFA exchange.||Capital requirements:- EUR 730,000 Application Fee: EUR 24,000 Annual Supervisory Fee: EUR 50,000 for the first generated revenue of EUR 1,000,000 and EUR 5,000 for each additional part till revenues amount to EUR 100, 000,000|
Below mentioned are the steps that shall be adhered to while starting a cryptocurrency in Malta:
The first step is to identify the type of VFA services offered by the company and determine whether the services are covered under the VFA act by giving the Financial Instrument Test, as the act allows only certain entities to offer VFA services.
The subsequent step will include establishing a company in Malta or other jurisdictions. If the company operates from outside Malt, it must have a branch in Malta with its registered address. Further, the company shall carry out only those activities for which the license was granted. Moreover, the company shall hold a valid corporate bank account.
The applicationcan only be processed through a VFA agent. Hence the company shall appoint a VFA agent who will act as a correspondence between the authority and the company.
The person willing to trade its virtual financial assets on the VFA exchange can do so by making an application at the MFSA. It is pertinent to mention that the VFA agent shall carry out all the activities of application and licensing. For obtaining a licence for cryptocurrency in Malta, the applicant shall undergo a test conducted by MFSA. The tests apply to the applicants who:
The applicant must apply to the VFA agent and a statement of intent with MFSA before commencing cryptocurrency activities in Malta. The statement of intent shall contain the following:
After submission of the application, a preliminary meeting shall be held with the applicant and the MFSA. If there is a requirement of any other documents mentioned by the MFSA, then the applicants shall within 60 days submit the complete application.
After applying, the MFSA shall review the application and analyse the information set out in the application. If the authority is satisfied with the application, it will issue “in principle” approval that will be valid for 3 months from the date of issue. The applicant must then fulfil and finalise all the conditions mentioned in the ‘in-principle approval” within 3 months. The authority will issue the grant of licence for operating cryptocurrency activities in Malta after satisfying all the conditions.
After the grant of licence by the authority, the applicant shall have to undergo other requirements with authority before commencing the business activities of cryptocurrency in Malta. However, the applicant can start its services within 12 months from the date of issue of license.
Before starting the business of cryptocurrency in Malta, the person or the applicant has to appoint preliminary functionaries of the company:
Malta is considered as a start-up hub for cryptocurrency companies.Being the first country to offer blockchain technology, it has acquired a dominant place globally. The stable approach of the country is creating an ideal place for many cryptocurrency companies worldwide. Moreover, the time required to start a cryptocurrency business in Malta is comparatively less than in other European countries. Malta is a crypto-friendly country but also requires that a VFA agent who will be the professional service provider be appointed by the company. The VFA agent will advise and provide any information on behalf of the company to the regulatory authority.