With Binance moving its company registration to Malta in 2018, OKEx followed suit. Currently, many exchanges such as Bittrex, DQR, ZB.COM, Exchain, BitBay, etc. have opened trading platforms or offices in Malta.
Due to its openness and positive attitude, Malta has become a safe haven for blockchain and cryptocurrency and is known as the "blockchain and digital currency paradise."
Malta Digital Assets Act
Malta officially enacted three digital asset-related bills on November 2018, 11, establishing a regulatory framework for cryptocurrency-related businesses, including cryptocurrency exchanges and ICOs.The bills are designed to provide legal security to investors and operators while ensuring the continued growth and development of Malta’s cryptocurrency sector and DLT.
The three bills targeting digital assets are:
1. Malta Digital Innovation Authority (MDIA) Act
2. Innovative Technology Arrangements and Services Act
3. Virtual Financial Assets Act
?The Malta Digital Innovation Authority Act
The bill provides a framework for auditors and managers of distributed ledger technology platforms to register for Level 1 certification of innovative technology services.
The bill specifies the Malta Digital Innovation Authority (MDIA) as the regulator of the industry and formalizes the regulatory process for blockchain. The MDIA will oversee the certification of cryptocurrency exchanges, brokers, asset managers and companies engaged in cryptocurrency business.
At the same time, MDIA serves as the ICO regulator and supervisor, and will serve as an advisory and sanctioning body responsible for the promulgation and enforcement of the Virtual Financial Assets Act (VFAA).
?Innovation, Technology and Services Act (ITASA)
The Digital Innovation Authority Act provides for the establishment of an authority in Malta specifically responsible for promoting Malta as a blockchain jurisdiction, encouraging the use of distributed ledger technology, ensuring user data protection and legal certainty, transparency and auditability.
ITASA provides regulation and certification of specified innovative technology preparations and services and contains the framework for how MDIA will provide certification of technology service providers.
The bill states that technology service providers that provide DLT platforms and smart contract-related platforms can be certified on a voluntary basis. Certified service providers are required to register IT system auditors and/or administrators with the MDIA.
?Virtual Financial Assets Act (VFAA)
The VFAA establishes a regulatory regime applicable to cryptocurrencies, ICOs and service providers involved in related activities, including cryptocurrency exchange businesses, provides a framework for the regulation of virtual financial asset products and the virtual financial asset sector, and makes corresponding provisions for related matters, including license applications and white paper requirements.
Brokers, e-wallet providers, investment advisors, market makers and crypto asset managers will also be subject to the new law.
Malta Digital License Application
According to the Malta Virtual Financial Assets Act, anyone who wants to engage in crypto-asset-related business in Malta needs to obtain a corresponding license.Malta crypto asset licenses can be divided into the following four categories, and applicants can apply based on their actual business:
ICO Regulation: Financial Instrument Testing
VFAA authorizes MSFA to perform a mandatory Financial Instruments Test (FIT).
For an ICO, if the test result is “yes”, then the ICO or cryptocurrency will be subject to MiFID (EU Markets in Financial Instruments Directive).Of course, even if the ICO is not considered a financial instrument in Malta, it may still be considered a security or financial product in other jurisdictions.
If the ICO tests as a non-financial instrument, it must be registered with the MDIA, comply with a series of transparency requirements, and must submit a white paper to the MDIA.A standardized list of information needs to be included in the white paper to enable interested investors to make an informed assessment of the proposed project, token structure and characteristics, and team background.In addition, the ICO sponsor team must conduct a Fit & Proper test and due diligence to ensure that the ICO project will not adversely affect the country's reputation.
【Compliance requirements】
1. For a cryptocurrency trading platform, all assets traded on this platform must pass the financial instrument test, which will determine whether the cryptocurrency exchange platform is subject to other laws and regulations.If the cryptocurrency exchange platform supports fiat currencies, then depending on how it is structured, the platform may need to obtain a payment institution license.
2. Both ICOs and cryptocurrency trading platforms should develop an operating plan outlining their systems, security access protocols, etc., and be supervised by the competent authorities.
3. All ICO projects must appoint a VFA agent approved by the VFAA, who will also become the representative of the ICO project in order to represent the ICO project to the MFSA.A VFA agent needs to be a lawyer, accountant, auditor or any other person who possesses the authorization, qualifications and experience that the MFSA deems necessary, and is required to have various responsibilities and expertise under the VFAA. Companies can apply for a VFAA license for the above activities through a VFA agent.
3. It should be pointed out in particular that China is a member of the European Union.Malta must require its domestic ICO projects and cryptocurrency exchanges to comply with all EU regulations, such as the General Data Protection Regulation.