The Cabinet of Malta approved three bills on Tuesday, one of which is the Virtual Financial Assets Bill that provides the regulatory framework for cryptocurrencies and initial coin offerings (ICOs), according to local media. The other two bills are the Malta Digital Innovation Authority Bill and the Technology Arrangements and Services Bill.
All three were also presented to the Parliament of Malta for its first reading on Tuesday. The next stage is a debate between both sides of the House before they are passed into law, the Malta Independent explained. The news outlet noted that Parliamentary Secretary for Financial Services, Digital Economy and Innovation, Silvio Schembri, “strongly believes”
“Once new laws surrounding blockchain technology and cryptocurrency are enacted in Malta, banks would be less reluctant to welcome companies working in the industry, presumably due to the legal certainty it would provide”.
He was also quoted by Malta Winds, saying, “As a government, we think that by regulating this market, it will ensure that the three main principles of financial regulation are adhered to and will be a market that protects the investor and provides market integrity and financial soundness.”
The Malta Digital Innovation Authority Bill establishes a new department named the Malta Digital Innovation Authority along with its duties and responsibilities. It also focuses on internal governance arrangements, explained Mamo TCV Advocates law firm. One of the key roles of the Authority is “the certification of DLT [Distributed Ledger Technology] platforms to ensure credibility and provide legal certainty to users wishing to make use of a DLT platform.”
The second piece of legislation, entitled the Technology Arrangements and Services Bill, deals with the registration of technology service providers and the certification of technology arrangements, such as concerning system administrators and auditors.
The Virtual Financial Assets Bill, the law firm described, focuses on ICOs “and the regulation in respect of certain service providers which will be involved in activities related to ICOs.” The firm added that “The bill will also outline the regulatory regime which will be applicable to cryptocurrency exchanges,” noting:
Malta has witnessed an exponential worldwide interest from exchanges seeking to relocate to Malta and issuers of ICOs wishing to launch from Malta. The proposed bill will further strengthen Malta’s position on the DLT front and solidify its reputation as a blockchain island.
Moreover, the bill empowers the Malta Financial Services Authority (MFSA) “with the necessary regulatory and investigatory powers” such as “the powers to issue directives, to adopt and publish rules, to require information…[and] to suspend either an ICO or the trading of a VC on an exchange.”