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Regulatory framework for virtual currencies collective investment schemes

Dated: [bxcode.pagedata.date]

The Malta Financial Services Authority has published the first regulatory framework for collective investment schemes, making Malta the first jurisdiction to set-up this framework to ensure investor protection and financial soundness with regards to collective investment schemes that invest in virtual currencies

 

Parliamentary Secretary for Financial Services, Digital Economy and Innovation, Silvio Schembri welcomed the publication and described it as “the first step towards having a Virtual Currency Act” adding stating work was being carried out for regulating virtual currencies, ICO’s, exchanges and the use of blockchain technology.

The publication of the rules ensured that risks associated with virtual currencies were properly addressed, thus sustaining Malta’s digital economy.

It was last October that the Authority issued its consultation document. Amongst the major concerns, a number of respondents stated that having a separate rulebook applicable to Professional Investor Funds (PIFs) investing in virtual currencies (VCs) would potentially create confusion in the industry and would significantly overlap with the current rulebooks especially where PIFs investing in VCs also invest in other asset classes.

The MFSA considered the feedback received and revisited this position so that the additional requirements pertaining to PIFs investing in VCs would be inserted as supplementary licence conditions applicable to such collective investment schemes and not as a standalone rulebook. These Supplementary Conditions were published on January 29, 2018.

These rules aim at providing a robust regulatory framework that seeks to ensure investor protection, market integrity and financial soundness with regard to collective investment schemes that invest in VCs. In order to achieve these objectives, the Supplementary Conditions introduce specific requirements

The MFSA’s 19-page feedback statement is found at

https://www.mfsa.com.mt/pages/announcements.aspx?id=9

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