Key Amendments To The VFA Act In Anticipation Of MiCAR – Financial Services

Recent amendments to Malta’s Virtual Financial Assets (VFA)
Act (Chapter 590, Laws of Malta), ratified by the Maltese
Parliament, through the Virtual Financial Assets (Amendment) Act,
2024 (VFA Amendment Act) which shall come into force on the
30^th June 2024 mark a pivotal step in aligning
domestic legislation with the upcoming Markets in Crypto-Assets
Regulation (MiCAR). These changes reinforce Malta’s position as
a premier jurisdiction for crypto-asset issuers and service
providers.

Here’s a breakdown of the key amendments and their
implications.

Alignment with MiCAR Definitions:

The amended VFA Act now incorporates the terms
“asset-referenced token” and “electronic money
token” as well as reference to MiCAR itself. This
implementation is essential as MiCAR’s Titles III and IV, focus
on obligations related to these tokens.

Removal of the VFA Agent Role:

A significant change introduced by the amendments is the
elimination of the VFA Agent role. The VFA Agent was previously
responsible for handling whitepaper registrations and license
applications on behalf of applicants. Due to the fact that MiCAR
does not envisage this role, the amended Act promptly eradicates
the role.

Direct Obligations on Issuers and License
Applicants:

Under the amended Act, obligations towards the Malta Financial
Services Authority (MFSA) now fall directly on:

• Issuers  seeking to register a whitepaper
  under Article 3 of the VFA Act, and




• Individuals applying for a license to offer a VFA
  service  as per Article 14(1) of the VFA Act,

since the role of the VFA Agent has been eliminated. Issuers and
applicants are now responsible for submitting required information
and documentation directly to the MFSA themselves, as well as
submission of an annual certificate of compliance.

Transitory Provisions:

To facilitate a smooth transition for stakeholders, transitory
provisions have been introduced. As mentioned above, issuers and
license applicants are no longer mandated to engage VFA Agents for
whitepaper registration or license submissions. However, whilst
a VFA agent who applied on behalf of an
applicant prior to 30th June 2024 can continue to service such a
client after the 30th June 2024, such VFA Agent must cease to offer
its continued services in relation to such application within three
(3) months from the first date of coming into force of the Virtual
Financial Assets (Amendment) Act, 2024 or until the competent
authority issues a decision in relation to the said application,
whichever is the earlier.

Deadline Awareness:

It is crucial for crypto-asset service providers to note that
license applications under Article 14 of the VFA Act will not be
accepted by the MFSA after August 1, 2024. This deadline
underscores the urgency for entities to align their regulatory
standing ahead of MiCAR’s implementation on December 30,
2024.

The recent amendments to the VFA Act signify Malta’s
proactive approach in adapting its regulatory framework to meet
evolving industry standards. By embracing MiCAR’s principles
and streamlining processes, Malta reaffirms its commitment to
fostering a conducive environment for crypto innovation and
investment. Crypto-asset issuers and service providers are
encouraged to stay abreast of these changes to ensure compliance
and seize opportunities in this dynamic landscape.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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