The MFSA has issued a circular to all Virtual Financial Asset Service Providers in Malta in relation to the transitory provision in Article 62 of the Virtual Financial Assets Act.
When the Act came into force in November 2018, any entity undertaking an activity that fell under the scope of the Act had a certain amount of time- between two weeks and 12 months, depending on their circumstances- to apply for licensing. This circular establishes that all transitory periods as previously prescribed shall cease by 31 October 2019 and that any person or entity wishing to continue providing VFA services after that date, is required to start the VFA services licensing application as soon as possible.
In order to apply for VFA Licensing in Malta, the following process must be observed.
A letter of intent must be compiled and submitted to the Authority. This must include a comprehensive written description of the proposed or existing structure, the VFA services for which licensing is sought, the persons who are proposed to hold key positions, and a legal opinion that the proposed or existing activity cannot be considered as falling under the jurisdiction of existing financial services legislation.
After receiving the letter of intent, the Authority will then schedule a preliminary meeting between themselves, the applicant and their VFA Agent. After the date of this meeting, the applicant has a total of 60 days to submit and application form as per the application guidelines, along with any supporting documentation that may be required.
Any person or entity who is currently operating under the transitory provision as per Article 62 of the VFA Act, must be aware that if they fail to apply as per the VFA Services License application process by 31 October, they may be subject to regulatory action as deemed fit by the Authority.
All communication, notifications, meetings, and submissions relating to the application process must be facilitated via a recognised and registered VFA Agent, such as BDO Malta.
Cessation of Activities
For any person or entity that is currently providing services that fall under the scope of the VFA Act and does not intend to apply for a VFA Services License, must stop all operations and notify the Authority before 31 October. As well as this notification, the MFSA also required a signed declaration that VFA services are not being provided in or from Malta. They must also confirm that the particular entity has no current or ongoing obligations to its clients in terms of VFA services.
If an entity is found to have been providing VFA services in or from Malta but has not notified the Authorities of their cessation, they can be subject to regulatory action being taken by the said authorities, even if they are no longer providing any services that are covered by the scope of the VFA Act.
How BDO can assist you
Earlier this year, BDO Fintech Advisory Limited, a part of BDO Malta was one of the first entities in Malta to receive a license to operate as a Virtual Financial Asset Agent in terms of the VFA Act. The granting of this license enables BDO to assist VFA issuers and VFA service providers in obtaining their licenses to operate in this regulated environment.
In terms of the end of the transitory period as of 31 October, BDO are able to assist businesses in their application for licensing, or their notification of cessation of activity. Our experts and a team of legal and regulatory professionals are able to undertake all of the required activities for preparing and submitting licensing applications, and liaising with the MFSA on all matters relating to the VFA Act.
Learn More about BDO's VFA services.
To find out more and to take the necessary steps required to remain in line with the law, contact us today.