The rapid spread of internet-based commerce and the push for more efficient, decentralised financial systems have transformed the way we understand money and investments. Cryptocurrencies like Bitcoin and Ether were merely the pioneers of a much broader transformation. Today, digital assets encapsulate an extensive spectrum ranging from utility tokens to stablecoins and security tokens.
Malta was among the first jurisdictions to regulate the sector through the Virtual Financial Assets Act (“VFA Act”) of 2018, which introduced the concept of Virtual Financial Assets (“VFAs”). However, this framework has since been superseded by the EU-wide Markets in Crypto-Assets Regulation (“MiCA”), formally Regulation (EU) 2023/1114, which now provides a harmonised legal framework across all EU Member States, including Malta.
MiCA establishes a comprehensive regulatory regime for crypto-assets that are not already classified as financial instruments under the Markets in Financial Instruments Directive (“MiFID II”). It introduces clear categories such as:
One of the most significant developments under MiCA is the creation of a harmonised EU-wide regime for Crypto-Asset Service Providers (“CASPs“). MiCA defines a CASP as a legal person or other undertaking whose occupation or business is the provision of one or more crypto-asset services to clients on a professional basis, and that is allowed to provide crypto-asset services in accordance with the relevant authorisation issued by regulatory authority of Member State. The list of regulated services includes:
A primary market offer is the activity of marketing and making available, to specified persons or to existing holders on behalf of an issuer, newly-issued digital financial instruments or instruments that are issued but not listed on any trading venue.
In terms of the Investment Services Act, in order to carry out the activity of ‘placing of financial instruments without a firm commitment basis’, an investment firm needs to apply to the Malta Financial Services Authority (“MFSA“) to obtain an Investment Services Licence. The term ‘without a firm commitment basis’ implies that such activity is done without any obligation on the investment firm to purchase from the issuer some or all of the digital financial instruments that it may not succeed in placing with third parties.
A primary market offer may relate to different financial instruments, including transferable securities, units in collective investment schemes, money market instruments and derivative instruments.
One of the services listed in the Investment Services Act is that of ‘operation of a multilateral trading facility (“MTF”)’, which requires a licence issued in terms of the Investment Services Act for such service to be provided in or from within Malta.
An MTF is a trading platform which brings together the buying and selling interest of multiple third-party potential buyers and sellers of financial instruments in a system and in accordance with non-discretionary requirements. An MTF does not include bilateral systems where an investment firm enters into every trade on its own account, as opposed to acting as a riskless counterparty interposed between the buyer and the seller.
A Digital Securities Exchange is an MTF which facilitates third party buying and selling of securities and other financial instruments structured in the form of DLT assets. These qualify as Digital Financial Instruments. Where a person operates an MTF for the buying and selling of financial instruments in or from within Malta, a Category 3 Investment Services Licence is required. Correspondingly, where the assets traded on an MTF are Digital Financial
Instruments, the operator of such Digital Securities Exchange requires a Category 3 Investment Services Licence.
Tokenisation of collective investment schemes is no longer a theoretical option but an emerging market reality. Under EU law, units of collective investment schemes may be issued in tokenised form, provided the fund complies with the UCITS Directive or AIFMD.
Malta’s legislation already supports the dematerialisation of securities, and the MFSA has confirmed its openness to tokenised fund structures. Tokenisation offers investors enhanced liquidity, efficient cross-border trading, and streamlined settlement while remaining subject to all applicable EU and Maltese fund regulations.
At Zerafa Advocates we guide clients through this regulatory process by combining technical regulatory expertise with hands-on licensing experience to help clients take advantage of MiCA while ensuring full compliance. Our services include:
For Issuers of Tokens:
For Crypto-Asset Service Providers (“CASPs“):
Ongoing Compliance & Advisory:
