If you are planning to start a fintech business in Malta, you may find this material helpful as it focuses on the adoption of virtual financial assets and tokens through the implementation of a regulatory sandbox environment.
Blockchain has many features that make it a significant advantage among all the opportunities that exist today. Most of the problems it can reliably solve are related to transactions. There are automatic rules that all participants obey, which theoretically allows transactions to proceed much faster since they do not need multiple regulatory checks. And yet, the issue of the correct organization of regulation of virtual financial assets (VFA) in Malta is quite acute.
The Malta Gambling Authority (MGA) recently announced amendments to the VFA Sandbox. What changes and adjustments have been made to the regulatory framework will be discussed in this blog post.
The rapid development of the digital economy is pushing Maltese regulators to pass the relevant laws regulating the cryptosphere. This is important because people who previously had no opportunity to buy cryptocurrency or were afraid to enter the "gray" zone will be able to do it on licensed platforms and in accordance with the letter of the law.
The VFA regulatory framework is designed to also enable operators to leverage distributed ledger technology (DLT). The regulation of the regulatory Sandbox in Malta has been adjusted to streamline the performance of operators.
If earlier the operator could do without a license, now novice VFA Sandbox participants must obtain an MGA license when entering the market. In some cases, authorization from the Malta Financial Services Authority may also be required.
Already registered Maltese companies participating in the Sandbox must verify ownership of the wallet. This can be done by depositing a minimum amount of € 1 in VFA equivalent by the player. Once the wallet is considered verified, this amount is refunded.
Participants are encouraged to cryptographically sign the wallet with their private key.
Moreover, many of the amendments address issues of obligations to combat money laundering and financing of illegal activities. In this respect, Malta is not a "pioneer", but only implements the FATF recommendations, which are already in force in many countries of the world.
Participants will now need to be more careful about their transactions on the exchange, because any transaction may seem suspicious to the exchange, and then additional documents may be required for verification.
Virtual service providers will be required to expand their staff to include a compliance officer who will monitor the compliance of AML users' transactions with legislation.
The first phase of the VFA Sandbox environment was launched early last year. Currently, the second phase will come into force by the end of this year. If you are interested in more information about fintech regulation in Malta, you can contact our specialists to schedule a personal consultation. Experienced legal advisors will advise and, if necessary, provide the necessary assistance in registering a fintech company in Malta.