Key Amendments to the VFA Act in anticipation of MiCAR
June 2, 2024
Recent amendments to Malta's Virtual Financial Assets (VFA) Act (Chapter 590, Laws of Malta), ratified by the Maltese Parliament, through the Virtual Financial Assets (Amendment) Act, 2024 (VFA Amendment Act) which shall come into force on the 30th June 2024 mark a pivotal step in aligning domestic legislation with the upcoming Markets in Crypto-Assets Regulation (MiCAR). These changes reinforce Malta's position as a premier jurisdiction for crypto-asset issuers and service providers.Here's a breakdown of the key amendments and their implications.
Alignment with MiCAR Definitions:
The amended VFA Act now incorporates the terms "asset-referenced token" and "electronic money token" as well as reference to MiCAR itself. This implementation is essential as MiCAR's Titles III and IV, focus on obligations related to these tokens.
Removal of the VFA Agent Role:
A significant change introduced by the amendments is the elimination of the VFA Agent role. The VFA Agent was previously responsible for handling whitepaper registrations and license applications on behalf of applicants. Due to the fact that MiCAR does not envisage this role, the amended Act promptly eradicates the role.
Direct Obligations on Issuers and License Applicants:
Under the amended Act, obligations towards the Malta Financial Services Authority (MFSA) now fall directly on:
- Issuers seeking to register a whitepaper under Article 3 of the VFA Act, and
- Individuals applying for a license to offer a VFA service as per Article 14(1) of the VFA Act,
since the role of the VFA Agent has been eliminated. Issuers and applicants are now responsible for submitting required information and documentation directly to the MFSA themselves, as well as submission of an annual certificate of compliance.
Transitory Provisions:
To facilitate a smooth transition for stakeholders, transitory provisions have been introduced. As mentioned above, issuers and license applicants are no longer mandated to engage VFA Agents for whitepaper registration or license submissions. However, whilst a VFA agent who applied on behalf of an applicant prior to 30th June 2024 can continue to service such a client after the 30th June 2024, such VFA Agent must cease to offer its continued services in relation to such application within three (3) months from the first date of coming into force of the Virtual Financial Assets (Amendment) Act, 2024 or until the competent authority issues a decision in relation to the said application, whichever is the earlier.
Deadline Awareness:
It is crucial for crypto-asset service providers to note that license applications under Article 14 of the VFA Act will not be accepted by the MFSA after August 1, 2024. This deadline underscores the urgency for entities to align their regulatory standing ahead of MiCAR's implementation on December 30, 2024.The recent amendments to the VFA Act signify Malta's proactive approach in adapting its regulatory framework to meet evolving industry standards. By embracing MiCAR's principles and streamlining processes, Malta reaffirms its commitment to fostering a conducive environment for crypto innovation and investment. Crypto-asset issuers and service providers are encouraged to stay abreast of these changes to ensure compliance and seize opportunities in this dynamic landscape.
About the Author
This article has been authored by Dr Chanelle Meli, Regulated Industries & Compliance Advisor.Should you require regulatory assistance in relation to the VFA Act and the upcoming amendments, and/or MiCAR, please get in touch with us here or via info@csbgroup.com