MGA issues Policy on the use of Distributed Ledger Technology by Authorised Persons

On the 30th of January 2023, the Malta Gaming Authority (“the MGA” or the “the Authority”) has issued a policy on the use of Distributed Ledger Technology (“DLT”) by the Authorised Persons (“the Policy”). The MGA issued a closed consultation regarding this policy in November 2022 since the Guidance on the use of Innovative Technology Arrangements and the acceptance of VFAs and Virtual Tokens through the Implementation of a Sandbox Environment” was scheduled to expire by the end of the year 2022.

The Policy is intended to provide an update on the MGA’s position on DLT within the gaming sector. The aim of the policy is to simplify the requirements previously found in the Sandbox Framework, while keeping in mind the outcomes of the consultation.

The Policy provides that the Authority’s approval is required before the operator is able to use DLT on their gaming platform. The MGA must be provided with all the information before this approval is granted. This could include a request for a legal opinion and all information regarding the Virtual Financial Asset (VFA”) or Virtual Token or the instrument involved. In the case of DLT assets that fall under the definition of financial instruments or as electronic money, may only be accepted by the MGA on a case-by-case basis. Virtual Tokens may be acquired directly form the operator and may be converted into fiat currency, and VFAs may be converted into Virtual Tokens so that the users use them on the operator’s platform.

Operators under this Policy shall be permitted to accept VFA deposits using their own wallets without any intermediary to process the transaction and have custody of the assets. When the operator wishes to make use of such wallets on its platform, the MGA must be consulted, and its approval must be obtained. The operator would need to provide all the policies and procedures which shall pertain to the wallet.

The operator may also outsource certain services to third-party operators as long as the third party has the authorisation required to perform the outsourced services, from the necessary authority.

The operators will be able to use smart contracts on their platforms and will also be able to host games or game components fully or partially on a DLT environment.

Subject to the transitory provision, the Policy shall take immediate effect and shall be considered instead of the MGA’s guidance on the use of Innovative Technology Arrangement sand the acceptance of Virtual Financial Assets and Virtual Tokens through the implementation of a Sandbox Environment.

Should you require further information or assistance relating to the above, do not hesitate to contact us.