Silvio Schembri, Junior Minister for Financial Services, Digital Economy and Innovation within the Office of the Prime Minister of Malta, has recently announced that the Maltese Parliament unanimously approved 3 bills on DLT/blockchain.
“Today Maltese Parliament unanimously approved 3 bills on DLT/blockchain, a 1st in the World. Honored to have driven these bills. Announced that Mr. Stephen McCarthy will be the CEO of the new Malta Digital Innovation Authority”
The three bills are as follows:
- The MDIA Bill – the bill shall provide for the creation of the Malta Digital Innovation Authority (‘MDIA’), the Authority which shall be responsible for the certification of technology arrangements and the registration of Technology Service Providers.
- The ITAS Bill – this bill shall set out the regime for the registration of Technology Service Providers and the certification of Technology Arrangements.
- The Virtual Financial Assets Bill – this bill shall set out the framework for ICOs, cryptocurrency exchanges, and the regulatory regime on to the provision of certain services in relation to virtual currencies. This bill would regulate intermediaries such as brokers, exchanges, wallet providers, asset managers investment advisors and market makers dealing in virtual currencies.
The Virtual Financial Assets Bill has created a Financial Instruments Test (the ‘‘Test’’) which determines which law shall regulate DLT assets seeking recognition in Malta. The Test will be mandatory for: 1) companies seeking to set up an ICO in or from within Malta; (2) companies which issued DLT assets overseas but wish to carry out a related activity in or from Malta; and (3) all other entities which shall be dealing with DLT-assets.
Essentially, the Test will determine firstly whether the DLT asset can be considered a Virtual Financial Asset (‘VFA’) under the Virtual Financial Assets Bill. If it can be considered as a VFA, the applicable regulation is the new Virtual Financial Assets Bill once it becomes law, and a whitepaper would be required. If it does not fulfil this description, the Test will then inquire whether the DLT asset falls under the definition of a financial instrument as set out in MiFID and the Maltese Investment Services Act. A ‘security token’ will often fall under this category.
If however, the DLT-asset cannot be classified as a VFA or a as a financial instrument, the DLT asset shall be considered a ‘virtual token’. Essentially, a ‘virtual token’ only has value on its respective platform and cannot be exchanged outside such platform.