Regulation of the cryptocurrency market is constantly becoming stricter. Nowadays jurisdictions impose high regulatory and risk management requirements on virtual asset service providers.
Despite this, we always manage to find a solution that suits the client. All the time our team provides research of the market and regulations on various markets to find the best jurisdiction. Not so long ago we have made the global overview of the VASP regulation in EEA and ready to share information with our future and existing clients. Today we will look at the features of obtaining a cryptocurrency license in Malta.
Tax Summary:
- Personal income tax – from 0% to 35%
- Corporate income tax – 35%
What law/s governs VASP activities?
- Virtual Financial Assets Act
- VFA rule books, VFA regulations, and any MFSA directives
What activities are included in VASP services?
VFA license types:
- Class 1 VFA License (min. capital €50,000) – 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.
- Class 2 VFA License (min. capital €125,000) – authorized to provide any VFA service and to hold or control clients’ funds, but not to operate a VFA exchange or deal with their own account.
- Class 3 VFA License (min. capital €730,000) – authorized to provide any VFA service and to hold or control clients’ funds, but not to operate a VFA exchange.
- Class 4 VFA License (min. capital €730,000) – authorized to operate a VFA exchange and to hold or control clients’ funds, virtual financial assets, or private cryptographic keys and custodian or nominee services solely in relation to the operation and activities of such VFA exchange.
Who is the VASP regulator?
- The Malta Financial Services Authority (MFSA)
What is the procedure for registering a VASP for a local company?
1. Establishing a Company. If the company operates from outside Malta, it must have a branch in Malta with its registered address. Further, the company shall carry out only those activities for which the license was granted.
2. Appointment of a VFA agent. The application for Malta VFA license can only be processed through a VFA agent. Hence the company shall engage a VFA agent who will act as a correspondence between the authority and the company. A VFA agent is the one who ensures that the management and board of directors of the entity are fit and proper to show adequate good standing and reputation, has sufficient financial resources, and that its board of administration has appropriate knowledge, experience, and skill in the field of information technology, DLT, and DLT Assets at all times.
3. Preparation and submission of license application. The entity will intimate the VFA agent and a statement of intent with MFSA before commencing cryptocurrency activities in Malta. The statement of intent shall contain the following:
a) Comprehensive structure of proposed services offered.
b) Identifying the key positions held by the managerial persons.
c) Description of how the proposed service does not fall within the scope of traditional financial services legislation.
After submission of the application, a preliminary meeting shall be held with the applicant and the MFSA. If there is a requirement for any other documents mentioned by the MFSA, then the applicants shall within 60 days submit the complete application.
4. Review of application by MFSA. Following the license application, the MFSA will assess the application and analyze the information provided. If the authority is pleased with the application, it will provide “in principle” permission for three months from the date of issuance. Within three months, the applicant must satisfy and finish all of the requirements indicated in the “in-principle permission.” After all prerequisites are met, the authorities will give a license to conduct cryptocurrency activities in Malta.
5. Post-licensing compliance. After the grant of license by the authority, the applicant shall have to undergo other requirements with authority before commencing the business activities of cryptocurrency in Malta. However, the applicant can start its services within 12 months from the date of the issue of the license.
Is there any specific authorization required for a VASP from another EU member state to provide services in this jurisdiction?
No person shall provide, or hold itself out as providing, a VFA service in or from within Malta unless such person is in possession of a valid license granted under this Act by the competent authority (art. 13 VFA).
What is the liability for the activities of a VASP from another EU member state without local registration/authorization in this jurisdiction?
Pursuant to article 54 of the Virtual Financial Assets Act for the activities of a VASP from another EU member state without local registration/authorization can be imposed a fine (multa) not exceeding ten million euro (€10,000,000) or up to three times the profits made or losses avoided by virtue of the offense, whichever is the greater, or to imprisonment for a term not exceeding 6 years, or both such fine and imprisonment, unless such fine or term of imprisonment is otherwise imposed under article 38(5).
Manimama Legal & Growth Agency provides a gateway for the companies operating as the virtual asset wallet and exchange providers allowing to enter to the markets legally. We are ready to offer an appropriate support in obtaining a license with lower founding and operating costs. We offer KYC/AML launch, support in risk assessment, legal services, legal opinions, advice on general data protection provisions, contracts and all necessary legal and business tools to start business of virtual asset service provider.
The content of this article is intended to provide a general guide to the subject matter, not to be considered as a legal consultation.
