THE VFA RULES FOR VFA ISSUERS (4)
The MFSA has on the 30th July 2018 issued a consultation paper on the Virtual Financial Assets rules for issuers of Virtual Financial assets. The closing date for submission was 13th August 2018 and now the MFSA is expected to issue the official chapter after taking into account the submissions which it has received as well as other consultations with relevant stake holders which it has carried out.
This paper is intended to form part of a rule book which will be entitled the ‘Virtual Financial Assets Rulebook’ and which will be divided into three chapters. This chapter applies to issuers of Virtual Financial Assets.
The first title of this chapter outlines the high-level principles which should guide issuers when issuing Virtual Financial Assets while title 2 sets out the general requirements for issuers which includes that the issuers must be legal persons and that the business is directed by two persons. Title 3 outlines the initial and ongoing requirements applicable to initial VFA offerings, which are mainly related to the requirements to register their white paper as well as the conditions to admit VFA assets on a DLT exchange. Title 4 provides details with regards to the administrative penalties and sanctions as well as the principles which will be guiding the MFSA when imposing administrative penalties.
This chapter also includes the MFSA’s interpretation on the transitory provisions provided for under Article 62(1)(a) of the Virtual Financial Assets Act.
This article will deal with other requirements that issuers have in relation to cyber-security, record keeping and I.T. infrastructure
Title 2 – Requirements for issuers (continued) - Cyber-security, Record keeping and I.T. infrastructure
An issuer must establish a ‘Cyber-Security Framework’ which shall include:
Information and data security roles and responsibilities
Access management policy
Sensitive data management policy
Threats management policy
Business continuity plan
Response and recovery plan
Security education and training
The Cyber Security Framework shall comply with internationally recognized cyber security standards and shall be in line with the provisions of the General Data Protection Regulation (GDPR).
The documents must be kept in a manner which will enable the MFSA to monitor compliance with the rules. Documents shall be kept at the disposal of the MFSA for at least five years, which may be increased to seven years at the request at the MFSA. The documents must be retained in a medium that allows storage of information in a way accessible for future reference by the MFSA.
The I.T. infrastructure must ensure the integrity and security of the data, the availability, traceability and accessibility of the data, its privacy and confidentiality and that it is in line with the GDPR.
The I.T. infrastructure must be located in Malta and / or in any other EEA member state and / or any other third country wherein the MFSA will be satisfied that the above-mentioned requirements are satisfied. Where the issuer’s I.T. infrastructure is not located in Malta, or is located in a cloud environment, data must be replicated real time by virtue of a live replication server located in Malta.
How can we help?
Please contact us for a free initial consultation on how we may be able to assist you. We can assist you in setting up your company in Malta, setting up a bank account for the Malta company, drafting and / or reviewing the white paper which would have already been prepared. We can also assist by providing you with the initial legal advice on the type of token which you intend issuing i.e. whether the token is a financial instrument, a virtual token, electronic money or a Virtual Financial Asset. We can also assist you in the preparation and submission of the application and the supporting documentation to register your white paper in terms of the VFA Act and / or to obtain a licence to operate a crypto currency exchange in or from Malta.
We are also publishing on a regular basis updates about blockchain, DLT, VFA exchanges and ICOs and encourage you to get in touch with us if you would like us to keep you duly updated about regulatory development in this area. If you would like to receive such updates, or if you have any queries, please do not hesitate to contact us on [email protected].
Apart from its offices in St. Julian’s Malta, ACT operates from a second office in Gozo, which is situated in the capital city of Victoria. For an appointment in our Gozo office, please call on 00356 21378672 or send us an email on [email protected].
This article contains general information only and is not intended to address the circumstances of any particular individual or entity. ACT, by means of this article is not rendering any accounting, business, financial, investment, legal, tax, or other professional advice or service. This article is not a substitute for such professional advice, nor should it be used as a basis for any decision or action that may affect your finances or your business. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. Before making any decisions or before taking any action that may affect your finances or your business, you should consult a qualified professional adviser. ACT shall not be responsible for any loss whatsoever sustained by any person who relies on this article.
16th September 2018
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