Regulating Cryptocurrency in MALTA

regulating cryptocurrency in Malta
Posted on 25.7.2018
Written by Eva Ciga

Cryptocurrencies are one of the biggest mysteries of all times. Bitcoin and other famous altcoins have proved to be the next currency of the future. In fact, the scope of cryptocurrency demand has been growing at an alarming rate. But, regardless of what people think of them, one thing has eluded in these coins for a while, and that is proper regulation.

Regulation in the cryptocurrency industry has been a hot topic for a while now. It seems that some of these restrictions are forcing major companies to relocate to more crypto-friendly countries. Malta has been one of the safe havens for most of these companies and more are contemplating to move here soon. Thanks to Distributed Ledger Technologies (DLT) regulation, Malta seems to be the best place for growing sectors of digital technologies. A notable confirmation that Malta was moving in the right direction in the regulation of cryptocurrency is the recent announcement by Binance.

Malta’s Position on Cryptocurrency

At the moment, Malta is an appealing ground for cryptocurrency companies for several reasons. The area is open-minded in matters related to regulation in this industry. Since it’s focused on the overall cryptocurrency industry, it allows for increased innovation. Currently, Malta’s cryptocurrency market is not regulated, but some clarifications have been obtained from the regulatory experts.

Several companies are actively considering moving to Malta as a result of regulatory pressure in their home country. Malta’s government is keen to improve this trend as it will be a major boost to its economy. Currently, most cryptocurrencies are not regulated under Markets in Financial Instruments Directive (MiFID). Also, MFSA (Mata Financial Services Agency) doesn’t require any cryptocurrency company to undergo any licensing process. But there is an exception to this regulation where the coin being traded is referred to as an investment instrument in the Investment Services Act.

Binance is an example of the cryptocurrency that has relocated to Malta. Binance main aim is to offer fiat to cryptocurrency deposits and withdrawals to increase its liquidity as well as open a platform for new clients and investors entering the market with fiat purchases. Presently, there are very few exchanges that offer this option. This leaves investors no option but to look for hedging alternatives like token Tether to avoid the high volatility and correlation that comes with cryptocurrency markets.

Similarly, Binance chooses Malta to reduce the risk associated with a centralized system and offer a decentralized solution to customers. All these aspects make this island an appealing destination to all kinds of firms. With most countries having taken a cynical approach to cryptocurrencies and other technologies, most have opted to shift to Malta to escape the harsh rules imposed on these firms.

Malta Blockchain Regulations

As a result of the continued hype surrounding ICOs and cryptocurrencies, the Maltese administration has decided to take to regulate the operation of cryptocurrency industries. This framework is expected to oversee the activities of these companies and also protect investors who support the development of this sector.

Towards the end of the year 2017, the Maltese government together with MFSA issued a statement with a range of regulation for companies plan to invest in virtual currencies. The main aim is to protect the interest of investors and ensure the financial market thrives in the right way. In addition, MFSA indicated that all investment companies would require to comply with these regulations.

In February, Maltese government presented three bills to provide all-inclusive regulations for virtual currencies, blockchain technology, and ICOs.

Malta Digital Innovation Authority (MDIA) Bill

According to the bill, MDIA will comprise of a Chairman and eight members selected by the Minister for Digital Economy. MDIA will supervise the certification and functioning of cryptocurrencies, blockchain technology, as well as ICOs. It will also serve as the national competent authority that is responsible for the registration and certification of the Technology Service Providers related to the TAS Bill.

This bill will act independently as a controller of ICOs and as a body. Therefore it will help promote government policy and protect the status of the nation’s jurisdiction.

Other responsibilities of MDIA will include promotion of Malta as a place of merit for DLT; fostering the use of DLT; promotion of education for DLT; safeguarding companies’ data; protection of user’s information; promotion of the transparent and auditable use of DLT; and more.

Any party can request MDIA to provide certification for a Technology arrangement. In this case, experts will review the entities compliance with law, security, and integrity.

Technology Service Providers (TAS) Bill

The next piece will be the Technology Service Providers (TAS) Bill which is expected to create a framework to regulate Technology Service Providers, and certify Technology Arrangements provided they feature an administrator registered with the MDIA.

TAS will start by capturing smart contracts and DLT platforms only. In future, the bill might extend to artificial intelligence platforms. DLT’s main benefit is the integration of smart-based contracts, without the involvement of a third party. Currently, the legislative framework doesn’t offer regulation inform of smart contracts.

With the new rule, if an individual wants to open an entity using DLT, they will be required to present this bill to MDIA for consent and adhere to the current legislative framework.

Virtual Currencies (VC) Bill

The Maltese government has paved way for a regulatory framework for ICOS and virtual currencies with the introduction of the VC Bill. The main aim of this framework is to regulate Initial Coin Offerings (ICOs) as well as other services associated with VC.

The framework will cover exchanges, brokers, advisors, wallet providers, and wealth managers dealing with cryptocurrencies. The proposed legislation framework is expected to be practical and help to regulate businesses related to Virtual Currencies. It may fall either under European Union (EU) or Maltase financial services regulation.

Certain ICOs may fall into the regulations related to investment services. So, MFSA will conduct a Financial Instruments Test to determine whether the cryptocurrency or ICO is a financial instrument or whether it’s part of the VC Bill. This test will apply to individuals or companies that offer ICOs in Malta. It will determine whether they fall into the category of the MiFID. An example of a real-life application of the proposed legislation would be the approval of an ICO or the certification of a DLT platform.

This bill is expected to create a strong legislative framework in any jurisdiction that will manage ICOs and provide a platform that can be used by most service providers. Individuals that offer these services will be required to adhere to the licensing requirements and obligations.

What’s The Future for BlockChain Companies and ICO in Malta?

With the existence of the above legislation framework, it’s clear that Malta is at the front line in blockchain and cryptocurrency jurisdiction across the world. Concerning the next step for Malta and cryptocurrency regulation. We will wait to see the outcome of the three bills already a table in the parliament. If they are voted in, we are set to see the beginning of new era of a proper cryptocurrency and ICO boom on the island. Experts are confident that this approval could see the industry surpass the success of iGaming industry in the island.

The current Maltese government is working tirelessly to ensure the regulatory framework becomes law. It has an array of advantages. As mentioned earlier, it has already been successful in the fast-paced iGaming industry. Over time, the state has grown to be among the most dependable regulatory units across the globe. Cryptocurrency and blockchain regulations will also be in their buck list of success.

The success it has received in iGaming has made it a competitive spot for international gamers which can be used to grow the blockchain sector. Recently, Malta was named the top country in a recent study by Morgan Stanley. It became a part of the islands with a huge population of cryptocurrency traders. The study also indicated that countries with a solid plan for blockchain and cryptocurrency regulations will be a hot spot for cryptocurrency-based entities.

For those nations that are on the frontline in the adoption of technology, it’s an exciting time and the creation of this legal framework will be a huge boost for blockchain companies. It’s expected that Malta will set the ground for regulation of cryptocurrencies and ICOs and other nations will follow suit.


Before the end of the year, Malta is expected to pass the three bills on cryptocurrency regulation. The regulatory framework will comprise the new authority to regulate cryptocurrency-based platforms. The new framework for these platforms to outline the how to work with smart contracts, and regulation of Virtual Currencies and ICOs.

The three aspects make Malta the most favorite country for cryptocurrency and blockchain entities to thrive. Although no specific dates have been issued, it’s clear that the bills will pass. Two major conferences are scheduled to happen this year- Malta Blockchain Summit and Delta Summit. It’s expected that either of them will be the official launch of the new cryptocurrency era in Malta.

Meanwhile, one thing is clear, that is the future of crypto and ICO regulations in Malta are looking promising. Therefore with Binance relocation to this small Island, it’s just the beginning of Malta becoming a true “Blockchain Island.”

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