The impact of the proposed regulation on markets in crypto-assets on Malta’s current virtual financial assets regime with specific focus on crypto-asset service providers

Abstract

The emergence of new technologies such as cryptocurrencies, left a vacuum in their regulation at law as they do not fall within the scope of traditional financial services legislation. Malta is currently one of the first and few EU Member States which regulates certain aspects relating to cryptocurrencies (termed under Maltese Law as ‘Virtual Financial Assets’), including virtual financial asset service providers and issuers of virtual financial assets. The EU has also felt the need to regulate cryptocurrencies in a harmonised manner across all its Member States. Thus, in 2020, the EU issued a Proposal for a Regulation on Markets in Crypto-Assets. However, no detailed analysis of the Proposed EU Regulation’s impact on service providers currently operating under the current Maltese Framework exists. Therefore, throughout this dissertation, a comparative analysis between the current Maltese Virtual Financial Assets Framework and the Proposed EU Regulation on Markets in Crypto-Assets shall be conducted, by focusing on crypto-asset service providers. From this analysis, the perceived impact that the Proposed EU Framework shall have on the current Maltese Framework, once effective, shall be discussed. Furthermore, this dissertation aims to provide recommendations at national level, to ensure that there is a smooth transition from the current Maltese Framework to the new Proposed EU Framework, once it is effective. This will ensure that service providers currently operating under the current Maltese Framework, will continue operating under the new Proposed EU Framework in a seamless manner, which will also give them a competitive edge over other service providers which are currently operating in other EU Member States.