Cryptolicenses in Malta: difficulties and specifics of obtaining
At one of the largest blockchain conferences in 2018, the Prime Minister of Malta officially announced new regulations and declared the country a blockchain island.
Before this, throughout the year, our company actively participated in panel discussions and made official proposals for regulating blockchain projects in Malta. Now we are ready to use our experience to help you design and obtain cryptolicense in the Republic of Malta.
Important specifics about obtaining cryptolicense in Malta
The preparatory phase takes a significant part of the time, this is due to the large list of requirements for candidates. Obtaining a license from the time of application can take from three to six months. Depends on whether MFSA will require additional documents. If the MFSA regulator is not sure about a candidate for a license, he will request as much information as will be necessary to make a decision.
2. Current account
One of the main specifics of the blockchain and cryptocurrency sector in Malta is the difficulties in opening a current account even after going through all the procedures and obtaining expensive licenses.
The Maltese license is divided into classes with varying degrees of restrictions. The cost varies from 3,000 € to 12,000 € for obtaining a license plus an annual renewal fee, which significantly exceeds the cost of a similar license, for example, in Estonia. The amount of registered capital for obtaining a Maltese license ranges from 50,000 € to 730,000 €.
Classes of cryptolicenses in Malta
Suitable for financial advisors
3 000 € and annually from 2 750€
Requirements for the authorized capital – 50 000 € or 25 000 € with PII insurance
This is a simple placement and consulting for VFAs. This license entitles its holders to get and also transmit all orders relating to virtual financial assets and also to offer investment advice.
Suitable for providing wallets, P2P exchange, asset management
5 000 € and annually from 4 500€
Requirements for the authorized capital – 125 000 €
This license entitles companies to offer VFA service and control or hold customer’s money. It also controls customers not to trade their own account or operate a VFA exchange.
Suitable for OTC traders, over-the-counter transactions
7 000 € and annually from 6 000€
Requirements for the authorized capital – 730,000 €
This license entitles its holders to offer any type of VFA service and to control or hold customers money. However, one is not allowed to operate a VFA exchange. Since this license offers granted rights, it has been seen as the best choice especially for the market makers and OTC traders.
Suitable for cryptocurrency exchanges of any type
12 000 € and annually from 25 000 €
Requirements for the authorized capital – 730,000 €
This’s the most comprehensive license which entitles companies to hold or control customers money and also operate a VFA exchange. It also entitles companies to control virtual financial assets, private cryptographic keys and be the custodian of nomination services only in the activities of VFA exchange.
5 recommended steps before obtaining a cryptolicense in Malta
1. Carefully read the law on virtual financial assets
VIRTUAL FINANCIAL ASSETS ACT – is one of the fundamental acts that regulates the activities of fintech and blockchain projects in Malta, as well as projects related to these niches.
2. Make sure that your company falls under the concept of distributed accounting register technology
MFSA (Malta Financial Supervision Authority) introduced the concept of Financial Instruments Test. Before starting to build a fintech/blockchain business/ICO in Malta, a company must make sure that it falls within the concept of distributed register technology.
3. Make sure that the administrative board of your company meets all the stated requirements:
The administrative board should have a good reputation, possess sufficient knowledge, skills and experience, devote enough time to fulfill their duties and understand the activities of the license holder, take into account the main risks
The administrative board shall establish, approve and control:
a) Skills, knowledge and experience of staff, as well as procedures and mechanisms for providing VFA services;
b) VFA assets and services policies provided under an acceptable level of risk;
c) The policy of rewarding of persons involved in the provision of services, aimed at promoting responsible business conduct
The administrative board should monitor and evaluate the adequacy and implementation of the strategic goals of the license holder in the provision of VFA services, as well as exercise a reasonable management and pursue a reasonable policy
The license holder must provide the administrative board with an access to all available information
The license holder must allocate sufficient human and financial resources for the training of members of the administrative board
Each member of the administrative board must act honestly and impartially in order to effectively evaluate and challenge the decisions of senior management
The administrative board should review and oversee the implementation of the management mechanisms, reasonable and effective management and diversification of duties in order to prevent conflicts of interest
4. Obtain a legal assessment of the project
This report contains all the necessary information about the regulatory environment related to the activities you intend to carry out in Malta. Thanks to the report, you can make the right decision before the start of the planned activity. The cost of the service varies depending on the complexity of the project and averages 8,000 €. We will provide more detailed information in person.
5. Visit Malta Financial Services Authority (MFSA)
We recommend that you submit your project to MFSA in advance and receive important informal feedback on what MFSA expects from you. In the case of our support, we will take on this task.
Special requirements for Malta cryptolicense application
Pay attention to the responsibilities for the licensing process in accordance with Article 14 of the VFAA.
An application for a license must be submitted exclusively through a VFA agent registered in accordance with the Law in the form and procedure required by the competent authority, as well as:
Accompanied by information and documentation in addition to those required by this act, in accordance with the requirements of the competent authority or in accordance with the regulations
Be checked in the manner and extent required by the competent authority
Contain an address in Malta to provide notifications to the applicant or other documents in accordance with the Law
Be accompanied by a description of the principles of security protocols and also other documents that may be required by a competent authorities
A fee that is non-refundable must be paid
The minimum list of documents for obtaining cryptolicense in Malta
Be prepared to provide all the necessary documents to MFSA:
MFSA application form
Completed questionnaires for shareholders, directors, senior employees, including compliance officer and MLRO
Completed MFSA compliance officer and MLRO competency assessment forms
Detailed business plan
Detailed financial forecasts for 3 years (the best, the worst and the normal scenario)
System auditor report
Policy and procedure development
Professional liability insurance (sample of contract or agreement)
Article of Associations
Business continuity and recovery plan
Our support includes a turnkey package of services. The cost of services is calculated individually for each project and can be provided upon request