MFSA issues a Consultation Paper on VFA Regulations

The Virtual Financial Assets Act (‘VFAA’) grants the Malta Financial Services Authority (MFSA) the power to make regulations to give effect to the provisions of the said Act.  The MFSA has just published a consultation paper which includes the draft Virtual Financial Asset regulations to be issued under the VFAA.

The draft legal notice issued by the MFSA sets out the regulations on (i) exemptions (ii) fees (iii) control of assets and (iv) administrative penalties and appeals.  The aim of these regulations is to safeguard financial stability, promote market integrity and ensure investment protection. 

The Legal Notice describes the different classes of licences and divides these into four types of classes.

VFAA Class 1 – Licence holders authorized to receive and transmit orders and / or provide investment advice in relation to one or more virtual financial assets and, or the placing of virtual financial assets.

VFAA Class 2 – Licence holders authorized to provide any VFA service and to hold or control clients’ money, but not to operate a VFA exchange or deal for their own account.

VFAA Class 3 – Licence holders authorized to provide any VFA service and to hold or control clients’ money but not to operate a VFA exchange.

VFAA Class 4 – Licence holders authorized to operate a VFA exchange and to hold or control clients’ money, virtual financial assets and / or private cryptographic keys and custodian or nominee services solely in relation to the operation and activities of such a VFA exchange.


Regulation 3 of the proposed legal notice sets out an exhaustive list of persons who shall be exempt from the requirement of a VFA services licence in terms of Article 13 of the Act.  Some exemptions will be automatically applicable, while a notification to the MFSA is required in the case of other exemptions.  Others shall be subject to a determination in writing by the MFSA.  The list of exempt persons includes, but is not limited to, a liquidator or a curator in bankruptcy acting in the course of the liquidation or bankruptcy; persons dealing on own account in terms of the VFAA or acting exclusively for their parent companies, or their subsidiaries; and securitisation SPVs. 


The proposed legal notice sets out the application and supervisory fees for licence holders and VFA agents.  The application fee for the registration of a white paper is €4,000 plus an additional payment of €1,000 as supervisory fee payable upon submission of the certificate of compliance.  VFA agents appointed in terms of Articles 7 and 14 of the Act are subject to application and supervisory fees which range from €5,000 to €7,500. 

Control of assets

In order to provide enhanced protection to the investors, the proposed Regulations set out additional requirements for persons in possession of a licence under the VFAA or acting under an exemption from the requirement of such a licence, when such persons are holding and/or controlling clients’ monies and/or assets. Such requirements include, for example, the obligation on subject persons not to use for their own account, any virtual financial assets which they hold on behalf of their clients. 

Administrative penalties and appeals

Regulation 24 of the proposed Legal Notice establishes that persons falling within the scope of the regulations who fail to comply with the provisions of the rules, will be subject to administrative penalties and other administrative measures.  Such penalties and measures may be imposed by the MFSA without recourse to a Court hearing, with the possibility for the subject persons to file an appeal to the Financial Services Tribunal. 

The consultation is open to the public until 20 July 2018 and interested parties can submit their comments and feedback with respect to the proposed Regulations by email on by not later than this date. 

How can we help?  

We shall be publishing updates about blockchain, DLT and ICOs regularly and encourage you to get in touch with us if you would like us to keep you duly updated about regulatory development in this area.  If you would like to receive such updates, or if you have any query on blockchain and ICOs, please contact us on  

Apart from its offices in St. Julian’s Malta, ACT operates from a second office in Gozo, which is situated in the capital city of Victoria.  For an appointment in our Gozo office, please call on 00356 21378672 or send us an email on  


This article contains general information only and is not intended to address the circumstances of any particular individual or entity. ACT, by means of this article is not rendering any accounting, business, financial, investment, legal, tax, or other professional advice or service. This article is not a substitute for such professional advice, nor should it be used as a basis for any decision or action that may affect your finances or your business. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. Before making any decisions or before taking any action that may affect your finances or your business, you should consult a qualified professional adviser. ACT shall not be responsible for any loss whatsoever sustained by any person who relies on this article.  

8th July 2018


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