Malta VFA Service Provider Licence

GDP GROWTH: 6.6% in 2017 REGULATORS: Malta Financial Services Authority, Malta Digital Innovation Authority TIMEZONE:Central European Time Zone (UTC+01:00) FINANCIAL SERVICES FRAMEWORK:EU and OECD approved FINANCIAL SECTOR:25% Annual Growth FINANCIAL TECHNOLOGY LAW: First in World

• Rules and Documentation in English
• Consumer Protection,
• Market Integrity and Financial Stability
• Pragmatic Regulator Reputable Jurisdiction
• Attractive Passporting
• Corporate Tax Regime

The legal framework specifically designed by the Government of Malta to regulate virtual financial assets (VFAs) and virtual financial assets related services (VFA Services) comprises a series of three laws:the Malta Digital Innovation Authority Act ((MDIA Act) establishing the Malta Digital Innovation Authority (MDIA); the Innovative Technology Arrangements and Services Act (ITAS Act) providing for registration of technology service providers and the certification of technology arrangements; and the Virtual Financial Assets Act (VFAA) mainly regulating initial coin offerings (ICOs), VFA service providers and VFA agents.Under the VFAA, no person can provide a VFA service in or from within Malta unless licensed by the Malta Financial Services Authority (MFSA) prior to commencing operations.The MFSA is the lead regulator for VFAs and VFA service providers. However, certain innovative technology arrangements, including DLTs and smart contracts may be referred to the Malta Digital Innovation Authority for further certification.If the DLT assets to be traded or dealt with enter the sphere of other regulated activities, such as securities or iGaming, then more regulators will be called into play. The different regulators work well together and share the vision of promoting Malta as a safe, regulated environment in which this industry may thrive.

• Undertake Fit & Proper Test
• Physical Presence
• Appoint a VFA Agent
• Initial Share Capital, Capital
• Adequacy and Liquidity Requirements
• Undertake the Financial Instrument Test  

Types  of  Licenses & Services

The VFAA regulates a whole range of service providers and services provided in relation to VFAs covering reception and transmission of orders, execution of orders on behalf of others,
dealing on own account, portfolio management, custodian and nominee services, investment advice, VFAs placements and the operation of a VFA exchange. These services are classified in four classes as shown in the table below.

Class of Licence, Application and Supervisory Fee

The licence application fees and annual supervisory fees vary by class of licence as per the table hereunder:

Licence ClassDescription of permissible activitiesMinimum Share Application FeeAnnual Supervisory Fee Class 1 May: receive and transmit orders, provide investment advice and/or the placing of virtual financial assets
May not: hold or control clients’ assets or money, deal on own account and/or act as a VFA exchange.
€50,000 or €25,000 + PI €6,000

€5,500 for revenue of €50,000, then + €700 for every further tranche of €50,000 up to maximum of €1,000,000 

Class 2 May: receive and transmit orders, provide investment advice, placing of virtual financial assets and/or hold or control clients’ assets or money.
May not: deal on own account or act as a VFA exchange. €125,000 €10,000 €9,000 for revenue of €250,000 then + €800 for every further tranche of €250,000 up to maximum of €5,000,000 Class 3 May: receive and transmit orders, provide investment advice, placing of virtual financial assets, hold or control clients’ assets or money and/or deal on own account
May not: act as a VFA exchange. €730,000 €14,000 €12,000 for revenue of €250,000 then + €800 for every further tranche of €250,000 up to maximum of €50,000,000 Class 4 May: receive and transmit orders, provide investment advice, placing of virtual financial assets, hold or control clients’ assets or money, deal on own account and/or act as a VFA exchange. €730,000 €24,000 €50,000 for revenue of €1m, then + €5,000 for every further tranche of €1m up