Following the implementation of the first phase of the Sandbox Regulatory Framework as of 1 January 2019, allowing authorised persons to accept Virtual Financial Assets (VFAs) as a means of payment, the Malta Gaming Authority (MGA) has now launched the second phase of the framework.
The second phase extends the framework to Innovative Technology Arrangements (ITAs), including Distributed Ledger Technology (DLT) platforms and smart contracts, in a remote gaming environment. In this context, the MGA has started accepting applications for games or game components that are hosted fully or partially on a DLT environment, subject to certain conditions. The authority has also extended the duration of the Sandbox Framework until 31 December 2021.
For the purpose of the framework, the term ITA has the same meaning as assigned to it by the ITAS Act (2018).
The new developments are also reflected in the updated Guidance on the use of Innovative Technology Arrangements and the acceptance of Virtual Financial Assets and Virtual Tokens through the implementation of a Sandbox Environment.
ITAs shall be required to be audited by auditors registered with the Malta Digital Innovation Authority (MDIA), and shall only be accepted by the MGA if the audit report consists of a positive opinion and the MGA is satisfied that the regulatory requirements shall be adhered to by the authorised person.
An approval to participate in the Sandbox Regulatory Framework is conditional on the applicant holding the relevant licence issued by the MGA.
In cases where, through the Financial Instrument Test, the DLT Asset is classified as a VFA, the operator would need to satisfy the provisions of the VFA Act (2018) and any related rules. DLT Assets classified as Virtual Tokens will be subject to the MGA’s assessment for acceptance or refusal.
BDO Malta is the only firm licenced by all the relevant regulatory authorities in Malta to assist existing gaming operators and start-ups to benefit from the sandbox framework.
BDO Fintech Advisory Ltd is licenced by the MFSA to act as VFA Agent.
BDO Technology Advisory Limited is licenced by the MDIA to conduct Type 1 and Type 2 Systems Audit on ITAs and by the MGA to conduct Systems and Compliance audits on gaming infrastructure.
Should you wish to learn more about our services, get in touch today or contact BDO’s Technology Advisory team.