Crypto License in Malta

Advantages

CRYPTO REGULATION IN MALTA

Malta has a strongly progressive approach to cryptocurrency, positioning itself as the world leader in the regulation of cryptocurrencies. Regardless of the fact that cryptocurrencies are not a legal tender in Malta, the government appoints it as a «means of exchange, unit of account or savings». Adding to the existing POD/FT legislation, the Government of Malta was the first to apply three Digital Assets Acts (MDIA, ITAS and VFA), as well as blockchain legislation. Malta’s cryptocurrency regulation does not include specific tax legislation, and currently VAT does not apply to transactions for exchange of fiat currency to cryptocurrency.

Cryptocurrency Exchange

The exchange of cryptocurrency is legal in Malta. In 2018, the Maltese government passed landmark legislation defining a new regulatory framework for cryptocurrencies hence solving problems related to POD/FT. Malta regulation includes several accounts of cryptocurrency including the Virtual Financial Assets Act (VFA), which sets a global precedent by setting a regulatory regime applicable to cryptocurrency exchange, ICOs, brokers, wallet suppliers, consultants, and asset managers.

VFA (from November 2018) came with the Law on Innovative Technologies and Services, setting up a regime for future registration and reporting of crypto service providers. Malta also saw the establishment of its Digital Innovation Authority. MDIA is the government entity in charge of developing cryptocurrency policy, collaborating with other nations and entities, and ensuring ethical standards for using cryptocurrency and blockchain technologies.

Malta Cryptocurrency Regulation No new money laundering legislation or cryptocurrency is envisaged, as the Office of Malta Financial Services, in its Strategic Plan for 2019-2021, stated that the financial services regulator of the country will be taking an active role in monitoring and managing business risks related to licensed virtual assets and business cryptocurrency to better fight money laundering and other financial crime risks. It added that the Maltese government would also take a look into the integration of AI in regulating cryptocurrencies and might issue specifics for proposals on security tokens.

Crypto regulation in Malta

Also, lawyers from Regulated United Europe provide legal support for crypto projects and help with adaptation to MICA regulations.

Embrace Crypto Innovation: How to Get a Crypto Exchange License in Malta 2024

Malta is known as the “Blockchain Island” because it was one of the first countries to establish a solid regulatory framework for crypto companies. The article below is a step-by-step guide that explains how to get a crypto exchange license in Malta, comprising both the process and prices of establishing a licensed crypto operation in this lively regulative environment.

Crypto Exchanges Regulatory Environment in Malta

Falling under the purview of the Malta Financial Services Authority, Malta offers an enabling platform for crypto businesses through well-defined legal frameworks that seek to strike a balance between the promotion of innovation with requirements for compliance and security. Malta’s move not only makes crypto exchanges easy but also brings credibility to them, making them accessible to more markets.

Types of Crypto Licenses in Malta

Malta offers a number of important licenses that address different needs in the cryptocurrency market:

• Crypto exchange license in Malta allows crypto-to-fiat and crypto-to-crypto exchange.
• Malta crypto brokerage license authorizes the provider to offer intermediary services in crypto transactions.
• The Malta crypto trading license is required when one wants to directly engage in a trading activity.
• The Malta VASP crypto license covers service providers that work with virtual asset-related activities

Requirements for Obtaining a Crypto License in Malta

Therefore, the application process must fulfill the strict AML and KYC requirements of sound business planning and evidence of financial stability. The applicants must also show their IT security against future hacking incidents that may arise.

Economic Considerations of Licensing

The cost of a crypto exchange license in Malta depends on the kind of license and the scale of operation. Malta is probably not offering the cheapest crypto license in Malta, but its good regulatory competitive edge is well worth the investment one needs to make.

Benefits of a Maltese Crypto License

A license obtained in Malta means that the business shall have strategic access to European markets, with a credible seal from the regulatory body, hence commanding investor confidence and corporate repute. This special advantage for companies thereby scales through the EU.

Crypto Market Opportunities in Malta

The proactive stance of the Maltese government on crypto and blockchain technologies presents a host of opportunities for further growth and innovative creations. It is possible for companies to leverage Malta’s leading position in digital and financial technology to expand operations.

Market Entry Strategies

Such a crypto exchange license on sale in Malta may be a pretty attractive deal for those businesses in a rush to get into the market. This route will surely save time and resources, of course, provided thorough due diligence is conducted in making sure that this license meets current regulatory standards.

Malta offers a fertile ground for crypto enterprises through its progressive and clear regulatory framework. With a crypto license obtained in Malta, a business enterprise will definitely be assured of compliance, full exploration of multiple market opportunities, and subsequent leadership in the global cryptocurrency frontier.

Crypto License in Malta 2024

Malta is called ‘blockchain island’ because it is one of the world leaders when it comes to creating a favorable regulatory environment for both cryptocurrencies and blockchain technology. In 2024, Malta also consolidates its position by offering a transparent and clear regulatory framework regarding cryptocurrency transactions. In the paper, we will look in detail at the current status of the crypto license in Malta and at the requirements on how to obtain it.

Regulatory environment

In Malta, the MFSA regulates cryptocurrency activity with the issuance of a number of basic laws, among which comes the Virtual Financial Assets (VFA) Act. Their goals were to enable innovation, provide consumer protection, and ensure market transparency.

Requirements for Obtaining a License

Companies seeking a cryptocurrency license in Malta must pass through a multitude of strict requirements:

• VFA Compliance: Complying with all the requirements of the Virtual Financial Assets Act.
• AML/CFT procedures: The implementation of appropriate measures which are reasonably designed to prevent money laundering and terrorist financing.
• Technological adequacy: Evidence that it makes use of sound technology in managing cryptocurrency assets and for the preserving of such.
• Financial strength: The sufficiency of its capital in respect of its operations, the amount thereof depending on the license category it falls under. License categories

Within Malta, there are a number of license categories, which correspond to the specific activity undertaken:

• Category 1 License: Permits firms to offer cryptocurrency management services without the custody of customers’ assets.
• Category 2 License: Applies to firms holding customers’ assets but not trading on their behalf.
• Category 3 License: Allows carrying out all cryptocurrency transactions, including trading on your behalf.

Licensing Procedure

Obtaining a cryptocurrency license in Malta follows certain stages, including:

• Document preparation and filing includes a business plan, AML/CFT policy, technology description, and management structure.
• MFSA Pre-Assessment: Review of documented filing against requirements
• Licensing: Grant license to the company after successful pre-assessment and additional verification.

Malta is still among the leaders of the regulation of cryptocurrencies, as it provides companies with a good legal basis for working with new financial assets. It is transparent and clear licensing that attracts international investment, making the cryptocurrency environment of the island safe and stable.

Companies registered in Malta

Crypto License in Malta 2025

Over the past decade, Malta has emerged as one of the world’s main innovative fintech hubs, adopting a truly forward-thinking approach toward its regulation. In this regard, innovation within the sector is encouraged while measures for consumer protection and financial stability are considered very seriously. The respective legal framework is devised to support an extensive range of fintech services, such as e-money transactions, payment systems, robo-advice, trading, lending platforms, cryptocurrencies, and blockchain applications.

Malta’s regulatory strategy for fintech is essentially based on three principles: that of proportionality, technological neutrality, and a risk-based approach. The Maltese regulators, which include the MFSA, are proactive in reaching out to the industry with the intention of being up-to-date with the latest technologies and business models while making sure they are able to comply with regulations. A number of priorities related to the development of digital finance, GRC, cross-border supervision, and sustainability and consumer protection have been mentioned by the MFSA under Supervisory Priorities 2024.

This is mainly because of the swift and effective response which has been taken in Malta regarding the economic difficulties caused by the COVID-19 pandemic. As a result, Malta has been able to ensure a sustained economic recovery to date and also remains a jurisdiction of choice for potential licensees and players in the fintech sector.

Malta is a European Union Member State, and it occupies a specific niche in the international financial system, fully adhering to the standards set at the international level. It provides unparalleled access for financial institutions to the huge market of the European Union with more than 450 million residents. Malta also forms part of a network of about 80 bilateral double taxation treaties covering major high-growth markets, doing much to facilitate international trade transactions and foster global business enterprise. A report now shows that, according to consulting firm McKinsey & Company, Malta’s fintech sector has become the third largest jurisdiction in the EU by 2022.

Malta was among the pioneers in coming forward with new financial technologies regulations, such as those on payment services, crowdfunding, and other fintech services. Perhaps most interestingly, virtual assets regulation was promulgated in 2018, preceding later legislation at the EU level in this area. In June 2024, the European Union adopted the Markets in Cryptoassets Regulation (MiCAR), a regulation that aims to harmonize and enhance the facilitation of DLT and cryptocurrencies regulation. The MiCAR Act, as approved by the European Parliament in April 2023 for enforcement in June 2024, offers increased protection to both users and investors, identifying a regulatory compliance issue at the Union itself. This offers the chance for Maltese companies subject to the Virtual Financial Assets Act to align themselves with such new requirements, an important step in reinforcing the regulatory environment.

On 1st July 2024, Bill 107, also known as the ‘Crypto Asset Markets Bill’, was discussed in the plenary session of the Maltese Parliament. It will amend the Virtual Financial Assets Act to bring its provisions into line with the EU’s Markets in Cryptoassets Regulation—the so-called MiCA. It will replace the amendments to introduce an expansive MiCA regime for cryptoassets, thus establishing a sound and coherent regulatory framework for cryptoassets.

Starting from 30 December 2024, MiCA would begin to apply directly in all EU Member States with common standards for the cryptoasset market throughout the Union. Malta, one of the first movers in regulating cryptoassets and cryptoasset service providers, has already brought its legislative framework in line with MiCA, especially with the recent amendments that came into effect in the VFA Act.

The Bill also seeks to consolidate this harmonization by providing a clear regime governing issuance and trading in cryptoassets, thus making explicit the terms of public offer and listing. It covers a few classes of cryptoassets, which include:

• Asset-Related Tokens, whose value is directly related to one or more assets, which could be commodities or even a fiat currency.
• Various forms of digital assets not falling under the above categories but nevertheless needing regulation.
• Electronic money tokens (EMTss) are a digital representation of fiat money for payment.

The Bill also amends the Banking Act to include relevant references to MiCA and regulates the issuance of EMTs and ARTs by adding more activities to the additional activities list that may be undertaken by banking organisations. It provides under the Bill the preconditions of crypto-asset service providers so that they can operate within a stable and reliable legal framework, which ensures a high level of investor protection, in conformity with international standards.

The Virtual Financial Assets Act, Cap 590, Laws of Malta, which came into effect in 2018, is one of the very first detailed regulatory attempts in the world regarding the regulation of initial offerings of virtual financial assets and virtual financial assets as such. This law targets consumer protection, development of the industry, and protection of interests of all stakeholders.

The VFA Act thus considers cryptocurrencies as VFAs, and a framework is put in place that involves clear and stringent regulations for various market participants, including issuers of cryptocurrencies, brokerages, managers of investment portfolios, custodians, holders of e-wallets, investment advisers, and obviously cryptocurrency exchanges.

It stipulates conditions under which ICOs are carried out, where one issues VFAs against any funds, an important ingredient in giving capital to businesses. Another major significant ingredient of the regulation is establishing whether licensing requirements shall apply to persons or entities offering VFAs or performing activities related to VFAs. This ensures that proper compliance controls are put in place and enhances transparency of transactions, hence boosting investor confidence in the cryptocurrency market.

The Virtual Financial Asset Act provides a full regulatory regime for ICOs and VFAs, and ancillary matters, such as the type of VFAs that may be traded through IVFAOs on DLT-based platforms. Under the required legal provision, a whitepaper must be filed with the MFSA for registration. For this very reason, a VFA must be permitted to trade on that specific platform. It shall contain all the necessary information, including full transparency in the use of funds raised, due diligence, and liability mechanisms in providing false information.

Within the meaning of the Act, an ICO is a financing mechanism using DLT technology whereby legal entities established in Malta issue VFAs against investment funds. The VFA Act and the Innovative Technology Agreements and Services Act, Chapter 592 of the Laws of Malta defines DLT as a digital database or registry which is maintained and safeguarded through the employment of a distributed architecture, in such a way that it is decentralised and at the same time resistant to the exercise of centralised control.

Under the Act, it further provides key prospectus requirements prior to the actual ICO issue, and also prescribes guidelines on advertisements with respect to IVFAOs or VFAs. It shall be honest and transparent in substance, in form, and in destination any promotional material whatsoever, at the origin of any form of marketing intended for encouraging the acquisition of VFAs or supplying any associated services, with a view to protect potential investors and build trust in new financial technologies.

Before the recent regulatory changes, the issuers of an ICO in Malta had to appoint a VFA agent approved by the Malta Financial Services Authority – MFSA. This measure was intended to ensure that all obligations related to the issuance and circulation of virtual financial assets would have been properly monitored and met. Such licensure encompasses any service related to VFAs and, therefore, includes order reception, transmission, and execution, portfolio management, custody, investment advice, and VFA exchange transactions, among others.

The VFA Act has undergone serious amendments with the aim of adapting it to the new regulatory framework brought about by the introduction of the MiCAR Regulation of the European Union. This is a necessary overhaul to set Malta as a leading destination for cryptoasset issuers and service providers. More precisely, Malta’s regulatory regime was found to be largely compliant with requirements under MiCAR, but key clarifications and additions came into light by the reformed VFA Act.

Amongst others, the amendments to the VFA Act included references to new categories of assets, specifically the ‘asset-linked token’ and ‘electronic money token’, in line with definitions and standards contained in the MiCA Regulations. This becomes particularly relevant in view of the entry into force of Sections III and IV of MiCAR, which, from 30 June 2024, will regulate the issuance and circulation of such tokens. These sections impose specific obligations on issuers and regulators in relation to the management and control of asset-linked tokens and e-money tokens, considerably strengthening the legal and regulatory framework against these kinds of assets in Malta.

Amongst the key amendments brought about in the revised Virtual Financial Assets Act was the abolition of the role of the VFA agent. This came as Malta sought to align national legislation with EU MiCAR, which does not provide for such a role. Due to the abolition, the responsibilities given to the VFA agent are now directly transferred to the issuers. This not only includes the provision of complete information and documentation to the MFSA but also includes an annual compliance certificate, in which case the issuers are made more responsible and transparent.

Other amendments to the law removed the requirement for VFA agents to apply for licenses on behalf of applicants. The applicants today can apply directly or through advisers, hence removing bureaucratic bottlenecks and streamlining the process of licensing.

These reforms simply signal the overall strategic objective of Malta to introduce a sound yet flexible regulatory regime that would address the rapid evolution of the cryptoasset market. Protection of consumer interests and integrity of the financial market continue to be key focal points, while cybersecurity and resilience also feature as prominent topics. One of the latest breakthroughs in Malta’s integration involves Artificial Intelligence and the Internet of Things to ensure a robust, scalable technological infrastructure supportive of innovation and an effective adoption of advanced fintech solutions.

Malta therefore continues to actively develop its regulatory and technological landscape, reinforcing its status as a jurisdiction of choice for innovative technologies and a recipient of international investment in fintech.

The fintech industry in Malta falls under the purview of numerous specialist regulators, with each one usually taking responsibility for a different heading on matters of regulation and enforcement.

The Malta Financial Services Authority (MFSA) is the key regulator for financial services, including FinTech. The MFSA carries out licensing, supervision and control functions for financial institutions on the island in terms of a two-tier regulatory model, providing prudential supervision of the financial soundness of organisations and consumer protection with the purpose of building confidence in the financial system and protecting the interests of depositors and investors.

Malta Digital Innovation Authority-World’s first regulator specializing in the oversight of innovative technology agreements, including projects based on DLT – blockchain technology. MDIA supports the creation and implementation of new technologies, while it also ensures compliance with regulatory standards, including voluntary technology agreement registration and certification.

The Financial Intelligence Analysis Unit plays a very important role in the fight against money laundering and the financing of terrorism. In its work of ensuring compliance with relevant regulations and standards by players in the financial sector, including fintech companies, the FIAU reinforces the integrity and security of Malta’s financial system internationally.

This integrated regulatory framework, therefore, provides for total oversight over the rapidly changing environment of the FinTech sector, matching innovation with stringent controls that help uphold high standards of transparency, safety, and accountability. It enables Malta to retain its reputation as one of the world’s leading centres of fintech innovation and thereby attracts capital and talent into the digital finance sector.