The Malta Financial Services Authority ("MFSA") has issued an important circular to provide extensive guidance on the licensing and authorisation process for crypto-asset service providers ("CASPs") under Regulation (EU) 2023/1114 of the European Parliament and of the Council of 31 May 2023 on markets in crypto-assets and the Markets in Crypto-Assets Act, 2024 ("MiCA Act") along with the additional legal notices which were published. The MiCA Act seeks to provide a single set of rules for crypto-assets across the European Union. With Malta transitioning from its existing Virtual Financial Assets ("VFA") Framework to the MiCA regime, this circular offers critical insights for entities navigating the regulatory landscape.
Adapting to the MiCA Framework
The MiCA Act is designed to strengthen market integrity, improve consumer protection, and foster innovation in the crypto-asset sector. For enterprises operating in Malta, the shift to this framework entails significant changes to licensing procedures. The MFSA has categorised impacted entities into two distinct categories: those already licensed under the VFA Framework before 30 December 2024 and those applying for a licence under the MiCA regime after that date.
Entities holding a valid licence under the VFA Framework prior to the cut-off date are referred to as Category A entities. These entities can continue operating under the transitional rules or opt for a simplified authorisation process to align with the MiCA Act. In contrast, Category B entities, which did not obtain a VFA licence by the said deadline, must initiate a new application process under the MiCA Act and its rules and regulations.
Category A Entities: Transition Options
For Category A entities, the MFSA has outlined two routes for compliance. The first option involves leveraging the grandfathering provisions under the MiCA Act, allowing these entities to continue operations with their existing VFA licence during a transitional period. Alternatively, these companies may choose to apply for a MiCA licence through a simplified process.
The simplified application procedure requires submitting a Board Resolution underlining the intention to transition to MiCA, along with the surrender of the existing VFA licence under the VFA Act, subject to the approval of the Authority, once authorised to operate in terms of the MiCA Act. Additionally, applicants must pay the applicable fees as specified in the Markets in Crypto-Assets Act (Fees) Regulations, 2024 (L.N. 295 of 2024), and provide any outstanding information and documentation as per the MFSA's thematic questionnaire, if they did not take part in the MiCA thematic exercise in 2024. Entities that participated in the 2024 MiCA thematic exercise may rely on previously submitted information, provided it is deemed complete and accurate and submit any missing documents, where needed.
Category B Entities: New Application Process
Entities classified as Category B are those that did not secure a VFA licence by 30 December 2024. These entities are required to submit a fresh application under the MiCA Act, as the simplified procedure does not apply to them. The application process involves submitting a signed statement of intent, paying the requisite fees, in compliance with Article 6(1) of the Markets in Crypto-Assets Act (Fees) Regulations, 2024 (L.N. 295 of 2024), and supporting information and documentation as specified in the MFSA thematic questionnaire. Following receipt of a declaration of intent, the Authority will provide a MiCA thematic questionnaire to help applicants through the documentation requirements, stipulating that any additional information may be requested if needed.
Category B entities must prepare for a lengthy review process, as their applications will undergo a full evaluation in line with MiCA's regulatory standards. Early preparation and thorough documentation are essential to ensure compliance with the MFSA's requirements.
Post-30 December 2024: Application Procedures for New Entrants
New establishments seeking authorisation under the MiCA regime after 30 December 2024 must adhere to the procedures described in the MFSA's Authorisation Process Service Charter. The necessary application forms will be made available on the MFSA's website in 2025. These include forms for authorisation as a crypto-asset service provider and an issuer of asset-referenced tokens, as well as notifications for whitepapers related to e-money tokens and other crypto-assets.
Applicants must ensure that all required fees, as stipulated in the Fees Regulations, are paid in full. The MFSA has emphasised the importance of providing accurate and complete documentation to expedite the licensing procedure.
Strategic Implications for the Crypto-Asset Sector
Entities operating or planning to operate within Malta's crypto-asset sector are strongly encouraged to review the circular in detail and align their operations with the MiCA Act's requirement. Specifically, the said circular provides entities with the clarity needed to navigate this complex regulatory shift. For Category A entities, the simplified authorisation process presents a practical route to compliance, enabling a seamless transition to the MiCA regime. Conversely, Category B entities and new entrants must allocate resources and attention to meet the rigorous application requirements under MiCA.
This new shift reinforces Malta's commitment to maintaining its position as a forward-thinking jurisdiction. Whilst embracing EU-wide regulatory standards for crypto-assets, it further solidifies its reputation as a hub for innovation and compliance in the digital asset space.
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.
