The European Markets in Crypto-Assets Regulation (MiCA) and its Implications for the MFSA and Malta

On the 6th of October, the Malta Financial Services Authority (‘MFSA’) gave an overview of the anticipated impact of the provisional agreement reached by the Council presidency and the European Parliament on the MiCA proposal. Such development is regarded as significant since it aims at creating a harmonised regulatory framework for crypto assets at EU level. In turn, this framework would protect investors whilst ensuring market integrity and preserving financial stability.

The sections within MiCA which relate to crypto-asset service providers will be enforceable 18 months after the Regulation’s enactment which is expected to take place within the first quarter of 2023. MFSA’s Head of FinTech Supervision, Mr Herman Ciappara and analyst Samantha Cuyle explained that since MiCA is directly applicable, this will inevitably translate in the repealing of the local Virtual Financial Assets regime. As such, in preparing for the entry into force of MiCA, the MFSA is currently undergoing an exercise in bridging the gaps between MiCA and the local framework in order to ensure a smoother, seamless transition.

Locally authorised entities in terms of the Virtual Financial Assets regime are expected to benefit from the fact that the local framework and MiCA are both rooted on the MiFID framework and as such, the MFSA anticipates minimal impact on such entities. Additionally, the MFSA anticipates that the regulatory experience in authorising and supervising crypto-asset market participants garnered over the past years will put Malta at the forefront within the sector.

For further information, please contact DF’s Financial Services team on dfcs@dfadvocates.com.


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