Cryptocurrency license in Malta

Malta Crypto Exchange License – Malta ICO License
To apply for a license, the applicant must be a legal entity registered in Malta. If you only offer investment advice, the applicant may be an individual residing in Malta. The company must have at least 2 directors / managers to satisfy the “dual control” principle.

System Auditor – Malta Cryptocurrency License

The MFSA may require a client to appoint a system auditor, as well as to have a system auditor in place at any time, even after obtaining a license. The system auditor is appointed / replaced subject to prior approval from the MFSA.

SA reviews / validates client DLT technology, prepares audit report and submits a copy to MFSA. The MFSA may ask another SA to review / test DLT at any time.

Services – Malta Cryptocurrency License

The following VFA services require a license when granted in relation to a DLT entity that has been identified as a virtual financial asset:

• Receiving and transmitting orders: receiving orders to buy, sell or subscribe to virtual financial assets and transfer this order to a third party for execution.
•  Execution of orders on behalf of others: entering into agreements to buy, sell or subscribe to virtual financial assets on behalf of others.
•  Operating on your own account: trading with your own capital, leading to the conclusion of transactions with virtual financial assets.
• Portfolio management: the management of assets owned by another person, if these assets include virtual financial assets or their management mechanisms are such that the person managing or agreeing to manage these assets has the right to invest any of these assets in virtual financial assets: Term “Assets” excludes any financial instrument, whether issued in Malta or not.
• Custodian or Nominee Services: (a) acting as custodian or nominee of the virtual financial asset and / or secret key; or (b) holding a virtual financial asset and / or private cryptographic key as a nominee, if the person acting as a nominee does so on behalf of another person who provides any VFA service or on behalf of such person’s client and such nominee holding is carried out in relation to such a service.
• Investment advice: providing, offering or agreeing to provide individuals as investors or potential investors or agents of an investor or potential investor with personal advice in relation to one or more transactions involving virtual financial assets.
• Virtual Financial Asset Offering: Marketing of newly issued virtual financial assets or virtual financial assets that have already been issued but are not admitted to trading on the DLT exchange, to designated entities and which are not associated with the offering to the public or existing owners of the issuer’s virtual financial assets.
• VFA exchange operation.

VFAA Class 1

• Receiving and transferring VFA orders; and / or
• Providing investment advice in relation to VFA; and / or
• VFA placement

VFAA Class 2

• Provision of any VFA services and storage or control of clients’ money, except for VFA exchange transactions or maintaining your own account

VFAA Class 3

• Provision of any VFA services and storage or control over the client’s money, except for VFA exchange transactions

VFAA Class 4 – VFA Exchange

• VFA exchange management;
• Holding or managing client money, VFA and / or private cryptographic keys;
• Custodian or nominee services solely in relation to the activities of such VFA exchange

Licensing process

An application for a VFA Services license can only be made through an approved VFA agent.

Step 1: Submit a letter of intent to the MFSA containing:
• Description of the proposed structure
• VFA service for which the license is requested
• Identify persons holding key positions
• Legal opinion that the proposed activity is not subject to the legislation on traditional financial services
Step 2. Participate in the mandatory pre-meeting at the MFSA offices
Step 3: Submit the application, supporting documentation and commission within 60 days of the preliminary meeting
Step 3: Once you are satisfied with the documentation / information and the assessment of suitability and proper qualifications, the MFSA issues a “formal approval” valid for 3 months, during which pending questions are completed
Step 4: The final license is issued
Step 5: It is necessary to start a business within 12 months from the date of issue of the license

License Requirements

• The application form must be completed and sent
• All documentation requested by the MFSA must be compiled and submitted, including a business plan, policies and procedures related to administration, compliance, risk management, security access systems and protocols, financial resources, capital adequacy, professional compensation insurance and any other documents requested by the MFSA
• Full due diligence documents in the company and the person who owns and controls the company must be submitted
• The company must be incorporated in Malta or, if not incorporated in Malta, it must be incorporated into a recognized jurisdiction, provided that a branch is also established in Malta and must meet any local presence requirements set by the MFSA
• The company must be managed by at least two individuals for “dual control”,
• Company facilities must be limited to acting as a license holder providing VFA services – the company cannot carry out any other activity that is licensed under any other law
• Payment of duties

All licensees will be posted on a public online registry.

The license holder must begin providing authorized services within 12 months from the date the license was issued, otherwise the license will be terminated.

Suitability and quality assessment
The suitability and quality assessment applies to:
• Persons holding at least 10% of direct / indirect interest in the company
• Voluntary owners
• Members of the Board
• Senior manager
• MLRO – must be a BoA member or compliance officer
• Compliance Officer (Compliance function can be performed by VFA agent) – can also act as MLRO
• Risk Manager (if applicable)
• Anyone else who effectively runs the VFA business

Must represent the PQ and demonstrate an acceptable level of knowledge, qualifications, professional knowledge and experience. It is also necessary to prove that sufficient time is devoted to the proper execution of the activity.

For more information on obtaining a license, please contact our specialist.