How to launch an ICO or STO in Malta’s newly regulated market

  • The small country of Malta, which has assumed an important position in crypto space, has introduced three new bills in 2018, which are now showing their effects.
  • Cryptocurrencies are not automatically assigned to one category. The system is granular and offers a great opportunity investment.

Various governments around the world have been tightening their regulations around cryptocurrencies, and traders have had to adapt to many new rules as a result. And in some cases, the changes in local laws can impact not only those who want to buy and sell cryptocurrencies as a regular trader, but also people looking to invest more seriously, e.g. by putting some money into an ICO or STO. Malta is a prominent recent example, with several changes that have impacted the scene significantly. There are now a few new precautions to keep in mind, and it’s a good idea to familiarise yourself with how the system works before investing any time or money into it.

Recent legislative changes

Three new bills were introduced in 2018 in Malta that were set to impact the local crypto trading market quite significantly. And so far, that’s exactly what we’re seeing – many traders have already reported that they’ve had to change their approach quite a bit in order to stay in touch with the current norms. The three acts in question were the Malta Digital Innovation Authority Act (MDIA), the Innovative Technology Arrangement and Services Act (ITAS), as well as the Virtual Financial Assets Act (VFAA). Each of the three has various implications for those operating with blockchain in Malta and is aimed at covering a different set of points in the sector.

The new acts in detail

The MDIA was passed with the idea of having a centralised new point of authority for controlling the developments of the local technological sector. As you might be guessing, this also encompasses cryptocurrencies, and it does so quite tightly. The main idea was to make the process of using relevant platforms more convenient and streamlined for their users, without impacting the overall state of the market significantly.

The ITAS act was directly related to the registration of technology service providers, imposing the requirement for audits for certain types of activities and processes. Companies operating in this sector must now abide by much stricter rules when setting up their operations, and this applies to many types of entities, not just companies directly involved in the crypto market.

And last, we have the VFAA, which directly addresses the elephant in the room – ICOs and other aspects of the crypto market, including exchanges and the other specific services that exist solely because of this market. Various aspects of the market are covered by this act, including licensing and documentation.

What you need to know

It’s important to realise that digital currencies are not automatically grouped under one category with these new regulations. The system is actually quite granular, and offers a great opportunity for those who want to set up their own investments in a separated, organised way. You just need to understand what category each type of asset falls under right now, because that might not be completely straightforward for those coming in from other legislative frameworks that don’t recognise those different types of cryptocurrencies and digital currencies in general.

Specific categories

There are four categories that are covered under the new legislation, and all of them are important to look into, even if you don’t think that you might need to refer to one or more of them. First, we have virtual tokens, which are basically all digital tokens that have no specific utility or value outside of the specific platform where they are being offered. They cannot be redeemed for money outside of that platform. Next, we have electronic money, which is a broader term that covers various types of virtual currencies which do have an application outside of their original platforms.

Moving on, we also have financial instruments, which is more or less a category created for compliance with some other legislative frameworks, bringing the Maltese situation closer to the global scene. If you are already familiar with financial instruments from other contexts, then you should know how they work here as well. Lastly, we have virtual financial assets, which practically covers anything that’s not covered by the previous three points. It’s not known what specific cryptocurrencies are going to fall under this, because it’s a bit of a broader definition right now.

Some investors have expressed concerns that the situation in Malta might become too unwelcoming to newcomers, but that doesn’t seem to be the case so far. While it’s true that investors now have more rules and regulations to align their work to, it’s not that hard to cover your bases and ensure that you’re paying attention to all important details. If you feel like you might be missing something, it’s best to hire someone experienced to guide you through the process, and there’s no shortage of those specialists on the market today. In the end, those who want to invest in cryptocurrencies in Malta have a great opportunity for that right now.


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