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Virtual Financial Assets (VFA) Rules applicable to issuers of VFAs

Josef Mercieca , Tax Partner |

31 July 2018

On the 30th July, the MFSA published the Virtual Financial Assets (VFA) Rules applicable to issuers of VFAs. 

The Rules elaborate on and explain the three month transitory period applicable to issuers of VFAs to draw up and register a whitepaper with the competent authority. The VFA Act specified that the transitory provisions are applicable only to issuers which have commenced an offering (or applied for admission to trading by not earlier than two weeks prior to the coming into force of the Act.

The Rules clarified that the offering includes pre-crowd sales as long as such sale is available to the public and not only to a closed number of invetsors.

The Rules are divided into 4 sections as per below:

1. High-level Principles - requiring Issuers to act ethically, honestly, fairly and professionally, to cooperate fully with the MFSA and to provide it with any information it may require. 

2. Requirements for Issuers, including that the Issuer's business is effectively directed by two persons in satisfaction of the ‘dual control’ principle. Requirements for the Issuer’s Board of Administration are also established, along with an obligation to appoint and have in place, at all times: [i] a Systems Auditor; [ii] a VFA Agent; [iii] an Auditor; and [iv] a Money Laundering Reporting Officer. Requirements regarding the Issuer’s cyber-security, record keeping and I.T. infrastructure are also set out.

3. Initial VFA Offerings and Trading on a DLT Exchange requirements, mainly related to the contents of the whitepaper and the requirements needed to register it. This part also sets out the conditions for admissibility to trading on a DLT exchange, rules relating to transactions by restricted persons and with related parties, transactions involving substantial unit holders and regulated information.

4. Enforcement and Sanctions


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