The Republic of Malta, one of the 27 states that make up the European Union, is rewriting its regulations to align with the rules established by MiCA for the growing cryptocurrency industry.
Malta is preparing for the coming into force next year of the Markets in Crypto Assets Act, or MiCA, legislation that will oversee the cryptocurrency market across all European Union (EU) member states.
The Republic of Malta, which was one of the first jurisdictions to draft cryptocurrency regulations with the aim of filling the legal gaps in this market for the benefit of investors and users, is now reforming its regulation to ensure the construction of a more stable and secure environment for the development of crypto assets.
The Malta Financial Services Authority (MFSA) recently introduced a series of proposed changes to the regulation governing the crypto industry in the country, the Virtual Financial Assets Regulation, in order to align its policies with the MiCA Act.
Mykhailo Romanenko, co-founder of Maltese platform Kyrrex, highlighted that Malta’s recent moves to harmonize with the MiCA Act represent an important step towards embracing cryptocurrency innovation and shaping the future of crypto regulation on the island.
The “blockchain island” prepares for MiCA
The changes proposed by Malta The changes to the crypto regulation seek to create a friendly but firm legal environment that guarantees the security of investors and makes the island one of the most innovative jurisdictions within this market. The changes also seek to harmonize Maltese regulation with the objectives of the MiCA Law, to encourage the growth and responsible innovation of cryptocurrencies in the EU.
According to the MFSA, Malta is proposing to remove several of the current requirements for virtual asset service providers and implement new ones that will improve security and stability. Some of these changes are:
- Remove the requirement to appoint a systems auditor when virtual asset service providers have innovative technology arrangements;
- Reduce initial capital requirements;
- Eliminate professional liability insurance;
- Appoint a custodian to ensure the security and protection of cryptoassets in accordance with best practices and cybersecurity;
- And establish a liquidation plan as a mandatory requirement to avoid operational risks.
The proposed adjustments to Malta’s Virtual Financial Assets Regulation aim to help virtual asset service providers in the country make a smooth transition to the regulatory framework presented by MiCA, in order to obtain their respective licenses and be able to legally operate with cryptoassets.
While these changes are generally perceived as positive, Coindesk highlighted that they could also lead to new risks of restriction and censorship for the innovation that characterizes the crypto industry.
All these changes will be evaluated during the consultation period that the MFSA has opened until the 29th of this month.
The EU is committed to the development of the crypto sector
In addition to Malta, France also shared its plans for modify and adapt MiCA's General Regulations and its policy on the licensing regime for digital asset service providers. France’s monetary authority, Autorité des Marchés Financiers (AMF), said that new changes to its regulation for the crypto industry will be implemented in early 2024.
Romanenko commented that the actions of France and, more recently, Malta, highlight the European Union's commitment to the development and innovation of the crypto industry.
Continue reading: All the details of MiCA, the law that will regulate cryptocurrencies in Europe
