Following the consultation issued on 18 September 2023 and after receiving extensive feedback from stakeholders regarding both the proposed amendments and the accompanying transition periods, the Malta Financial Services Authority (the "MFSA") has finally unveiled proposed amendments to Chapter 3 of the Virtual Financial Assets ("VFA"s) Rulebook, marking a significant step towards aligning regulations for VFA Service Providers with Title V of the Markets in Crypto-Assets ("MiCA") Regulation.
The revised Chapter 3 of the VFA Rulebook will be implemented in two stages, with the first stage taking effect on 1 January 2024, and the second stage following suit on 1 July 2024. These phased transition periods aim to provide VFA Service Providers with ample time to adapt and comply with the updated regulatory requirements.
Stage 1 includes inter alia amendments to provisions regarding systems and IT audit requirements as well as prudential requirements, whereby the minimum share capital requirements for VFA Service Providers will be as follows as of 1 January 2024:
During stage 2, on the other hand, MiCA-driven requirements will be already integrated into the Maltese VFA framework, which is much ahead of schedule. This ensures that compliant local VFA Service Providers will move closer to achieving full MiCA compliance, thereby enhancing their preparedness for a seamless transition to a Crypto-Asset Service Provider under MiCA.
Furthermore, the revised Chapter 3 introduces several notable updates that VFA Service Providers should be aware of:
- VFASP Return: In response to the changes in Chapter 3, the MFSA will release an updated VFASP Return in the first quarter of the coming year. VFA Service Providers are expected to submit this return at the end of Q1 in accordance with their reporting obligations.
- VFA Agent Role: In line with previous communications, the MFSA has initiated the legislative process in 2023 to remove the role of the VFA Agent from the VFA Framework. Once these legislative amendments are published, Chapter 3 of the Rulebook will be updated accordingly.
In addition, acknowledging that the MiCA Regulation is complemented by various regulatory technical standards, implementing technical standards, and guidelines, the MFSA plans to make further updates to the VFA Framework. These updates will integrate supplementary requirements once they are published.
The Circular to VFA Service Providers on Updates to Chapter 3 of the VFA Rulebook can be accessed here.
Revised Chapter 3 of the VFA Rulebook can be accessed here.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
