The Impact of MiCA on Malta

The proposal for a Markets in Crypto-Assets (“MiCA”) Regulation provides for a sound legal framework within the European Union (“EU”), in an area which remains mostly unregulated by existing financial services legislation. Once adopted, the MiCA Regulation will apply across all the EU Member States, including Malta. This will harmonise the regulatory framework for the crypto-asset market within the EU mainly on:

  • Issuing and providing crypto-asset services;
  • Ensure consumer and investor protection;
  • Ensure crypto-asset market integrity;
  • Address financial stability and monetary policy risks;
  • Address market manipulation; and
  • Prevent money laundering, terrorist financing, and other criminal activities.

Whilst the EU was still discussing the methods for regulating the crypto-asset market, several EU Member States moved forward with adopting national legislations. In fact, Malta has always been at the forefront in regulating this ever-evolving sector, and its adoption of the Virtual Financial Assets (“VFAs”) Regulatory Framework in 2018 came much earlier to the MiCA proposal, regulating the yet unregulated.

In light of the new MiCA Proposal, this means that Malta’s VFA Framework can be used as a basis for the adoption and enforcement of the MiCA Regulation in Malta. Arguably, Malta has adopted one of the strictest frameworks when it comes to regulating the crypto-asset market, with strict requirements required for a VFA licence. This in turn might have impacted the number of companies within this sector that would have chosen Malta as the jurisdiction to be licenced in.

Therefore, whilst Malta already has strong foundations in adopting and enforcing MiCA, this transition will also serve as a way to increase Malta’s attractiveness for companies as an ideal jurisdiction to set-up their base.

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