Malta takes next steps to align with EU’s MiCA regulation

Malta’s Financial Services Authority has initiated the next step to revise its cryptocurrency regulations, aiming to align them with the forthcoming European Markets in Crypto-Assets (MiCA) regulations set to go into effect in December 2024.

Malta’s announcement aims to bring about changes in its regulations governing exchanges, custodians, and portfolio managers, which will result in an alignment with the European Union’s MiCA framework. Other EU nations, such as France, have also introduced new rules in line with MiCA.

The view from Malta

Originally established in 2018 with the Virtual Financial Assets (VFA), changes to Malta’s cryptocurrency framework include the removal of the systems audit requirement for VFA license holders, the reduction of capital requirements for Class 3 and 4 license holders to $133,000 (125,000 euros) and $159,000 (150,000 euros), respectively, as well as the removal of the professional indemnity insurance requirement.

The updated rulebook also incorporates changes to outsourcing requirements in line with MiCA and integrates service-specific rules from MiCA into the VFA rulebook. This integration will result in amendments to requirements for VFA exchanges, order execution, and client suitability. Notably, the requirements concerning client categorization and the need for a Risk Management and Internal Capital Adequacy Assessment Report have been removed as part of these regulatory updates.

A step towards stronger regulation

Within Malta, all interested parties have the opportunity to participate in the public consultation, which will remain open until September 29.

Given ongoing regulatory uncertainty in the U.S., the introduction of the MiCA regulations has proven to be an important step for the industry. Prior to the introduction of these regulations, the European crypto market had varying rules and approaches in member states, with many assets existing in a gray area.