The Virtual Financial Assets (Amendment) Act, 2024

Background

The Virtual Financial Assets Act was introduced on 1^st November 2018, seeking to regulate the field of Initial Virtual Financial Asset Offerings, Virtual Financial Assets and other ancillary matters. The Virtual Financial Assets (Amendment) Act brings with it a number of significant changes to the VFA framework.

1. Removal of the VFA Agent Role

Prior to the introduction of the Virtual Financial Assets (Amendment) Act, an issuer of VFAs was required to appoint an authorised VFA agent to (i) assist, monitor and provide guidance throughout the whitepaper process and offering stage; (ii) oversee the operations of the issuer in relation to the VFA offering; (iii) ensure the issuer’s regulatory compliance and (iv) act as a channel of communications between the issuer and the MFSA.

However, following the introduction of the new amendments, the role of VFA agents has been completely repealed from the VFA Framework. All VFA agents must cease to offer any services within 3 months from the coming into force of the amendments. Furthermore, all VFA agents shall submit a VFA Agent Deregistration Form within 3 months from the coming into force of the amendments.

The former duties and functions of VFA Agents have now been redistributed onto Virtual Financial Asset Service Providers (VFASPs) and issuers of VFAs.

2. MiCA Transitory Provisions

Following the MFSA’s revision to Chapter 3 of the VFA Rulebook in the last quarter of 2023, the VFA (Amendment) Act introduces a number of provisions preparing for the alignment of the VFA service provider (VFASP) framework in the VFA with that of the Markets in Crypto Assets Regulation (MiCA) framework. This alignment is set to take place on the 1^st of August 2024 and aims to draw Maltese VFASPs closer to achieving full MiCA compliance, which is set to enter into force in 2024.

3. Exclusion of E-Money Tokens (EMTs) and Asset Referenced Tokens (ARTs)

As from the 30^th of June 2024, asset-referenced tokens (ARTs) and e-money tokens (EMTs) shall be excluded from the application of the VFA. Instead, they will be regulated solely by the MiCA Regulation as from 30^th of June 2024 onwards.

4. VFA Service Provider Applicant Deadline

The transitory provisions provide that any application for a VSASP licence made on or following the 1^st of August 2024 shall not be accepted by the competent authority. Thus, all persons seeking to provide VFA services under the existing framework must submit their licence application prior to the 1^st of August 2024.