On 18th November 2024 the Malta Financial Services Authority (the"MFSA") issued a circular informing the industry of the implementation into local legislation of Regulation (EU) 2024/1114 of the European Parliament and of the Council of 31 May 2023 on markets in crypto-assets (”MiCA”) through the:
- The Markets in Crypto-Assets Act, 2024;
- The Markets in Crypto-Assets Act (Fees) Regulations, 2024; and
- The Virtual Financial Assets (Amendment No.2) Regulations, 2024
The Markets in Crypto-Assets Act, 2024 (the "MiCA Act")
Whereas MiCA is directly applicable in all European Union Member States, the MiCA Act establishes those rules which Member States were given discretion on in terms of MiCA. In this regard, the MFSA has been established as the competent authority for the purposes of the MiCA Act, while other provisions have been included with a view to clarify the remit of the MFSA, as the Maltese competent authority, in relation to the remit of any other foreign competent authority appointed under MiCA.
The MiCA Act has designated the Financial Services Tribunal established under article 21 of the Malta Financial Services Authority Act (Cap. 330 of the laws of Malta) as the competent body to adjudicate appeals against any decision of the MFSA in terms of the MiCA Act, or any regulations of rules made or issued thereunder. With respect to offences, unless a fine or term of imprisonment is imposed in the regulations made under The MiCA Act, a natural person found guilty of an offence shall be liable, on conviction, to imprisonment for a term not exceeding six years or to a fine not exceeding €5,000,000, or both, whereas a legal person found guilty of an offence shall be liable, on conviction, to a fine not exceeding €15,000,000.
Finally, the MiCA Act has promulgated certain amendments to the Banking Act (Cap. 371 of the laws of Malta) limitedly to include the issuance of asset-referenced tokens ("ARTs"), e-money tokens ("EMTs"), and crypto-asset services as defined under MiCA to the list of additional services under the First Schedule. The MiCA Act has further amended the Virtual Financial Assets Act (Cap. 590 of the laws of Malta) (the “VFA Act”), setting out that the VFA Act shall be repealed on 3rd July 2026, following the end of the transition period from the VFA Act to MiCA and the MiCA Act. During the transition period, VFA service providers licensed under the VFA Act before 30 December 2024 may continue to provide such services in accordance with the VFA Act until 1st July 2026, or until they are granted or refused an authorisation to act as crypto-asset services providers ("CASPs") under MiCA, whichever comes first.
The Markets in Crypto-Assets Act (Fees) Regulations, 2024 (the “MiCA Fees Regulations”)
The MiCA Fees Regulations, which are the first set of regulations to have been published under the MiCA Act, implemented regulations regarding the fees applicable to notifications and authorisations (including extensions or modifications thereto), as applicable, which issuers of ARTs, EMTs, and other crypto-assets, as well as CASPs, are subject to, and supervisory fees due to the MFSA as the competent authority under the MiCA Act. Interestingly, in the case of a VFA service provider licensed under the VFA Act submitting an application between 30 December 2024 and 1 July 2026, a 50% reduction in fees shall be applied.
The MFSA has noted that in formulating the applicable fees, due regard was given to existing fees of a similar nature which are due to the MFSA at law in relation to activities which are comparable to the issuance of crypto-assets and the provision of crypto-asset services. According to the MFSA, the fees stipulated in the MiCA Fees Regulations are intended to ensure proportionality, with the following factors having been considered in the formulation of the said fees: (i) the complexity of the business model; (ii) the volume of business; and (iii) the cost of the resources which the MFSA would require to carry out the relevant functions under MiCA and the MiCA Act.
Further information on the aforementioned fees may be accessed here.
Virtual Financial Assets (Amendment No.2) Regulations, 2024 (the “VFA Amending Regulations”)
The VFA Amending Regulations form part of the exercise being carried out to amend the existing Virtual Financial Assets Regulations with a view to facilitating the transition from the VFA regime to the MiCA regime. In particular, these amendments set out when the VFA regime shall cease to apply including cut-off dates of currently applicable fees.
Should you require further information or guidance, please do not hesitate to contact Malcolm Falzon (malcolm.falzon@camilleripreziosi.com), Luke Mizzi (luke.mizzi@camilleripreziosi.com), or Liam Axisa (liam.axisa@camilleripreziosi.com).
