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 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 Title 3 of Chapter 2 of the rule book which outlines the initial and ongoing requirements applicable to initial VFA offerings, which are mainly related to the requirements to register the white paper as well as the conditions to admit VFA assets on a DLT exchange. 

Title 3 – Initial VFA Offerings and Trading on DLT exchanges – Supplementary conditions

Conditions for admissibility to trading on a DLT exchange

When considering applications for the admissibility of VFAs to trading on a DLT exchange, the MFSA will consider various circumstances, taking into account the best interests of investors.  Issuers must satisfy the conditions for trading throughout the whole period in which any VFAs are admitted to trading on a DLT exchange.

Transactions by restricted persons and with related parties

The issuer must require its board of administration, officers and employees to comply with an internal code of dealing.  This requirement will also be applicable to the board of administration, officers and employees of the issuer’s parent company and / or subsidiary.  Such persons are referred to as ‘restricted Persons’.  Such persons are likely to be in possession of unpublished price-sensitive information in relation to the issuer.

A Restricted Person cannot deal directly or indirectly in any of the VFAs of the issuer:

  1. At any time when he is in possession of unpublished price-sensitive information in relation to those VFAs

  2. Prior to the announcement of matters of an exceptional nature involving unpublished price-sensitive information in relation to the market price of the VFAs of the issuer

  3. Without giving advance notice to the board of administration

  4. The same restrictions apply to dealings by a restricted person in the VFAs of any other issuer, who by virtue of his position in the issuer is in possession of unpublished price-sensitive information in relation to those VFAs.

During the period of 30 days immediately preceding the publication of an issuer’s annual results, a restricted person cannot purchase or sell any of his VFAs.   An issuer may however allow a restricted person to trade on its own account or for the account of a third party during a closed period on a case by case basis in exceptional circumstances, such as for example financial difficulties.  The issuer must notify the MFSA immediately after these deals have been concluded.

The same restrictions apply to dealings by any Connected Person or any license holder acting on behalf of a restricted person as well as when the restricted person is acting as a trustee dealing in VFAs of the issuer.  These restrictions will not apply when the restricted person is not a beneficiary of the trust and the decision to deal is taken by the other trustees independently of the restricted person.

The board of administration of the issuer shall be responsible for vetting and approving transactions between an issuer and a related party, which must be entered into at arm’s length basis.

Transactions involving substantial unit holdings

Parties wishing to purchase or sell substantial unit holdings in an issuer must not create a false market and must not make statements which can mislead the market.

Regulated information

Regulated information must be communicated to the media in unedited full text.  This requirement is deemed to be fulfilled if the information communicated to the media indicates on which website the relevant documents are available.  Regulated information must be filed with the MFSA at the same time such information is disclosed to the public.

Regulated information must be communicated to the media in a way which makes it clear that the information is regulated information and clearly identifies the issuer concerned, the subject matter of the regulated information and the time and date of the communication of the regulated information by the issuer.

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.  

17th September 2018


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