Malta has carved itself a unique niche in the cryptocurrency sphere. The small European country has firmly established itself as a crypto hub. In the present time where Security Token Offerings (STOs) are rapidly gaining popularity as fundraising ventures, Malta has kept up with the times. It is clear that the country is all set to welcome digital tokens in their varying forms with a clearly defined regulatory approach that paves the way for blockchain leadership. The following article dives deep into the STO regulations in Malta.
Malta: The STO Regulation Leader
Malta has welcomed digital currencies and the blockchain industry in general with open arms. The Maltese government well understands that the blockchain is unstoppable and that it is here to stay. The officials clearly expressed their willingness to adapt to digital tokens and that they wish to make Malta a nation that pioneers change and set the benchmark for others to follow in its footsteps. This is in stark contrast to other nations that have either remained ambivalent to cryptocurrencies or banned them outright.
With regard to the STO regulations in Malta, the government has created three specific bills, the Virtual Financial Asset Act (VFA Act), Innovative Technological Arrangement and Services Act (ITAS Act), and the Malta Digital Innovation Authority Act (MDIA) which aim to create entirely new structures in view of this path-breaking technology called the blockchain.
Malta has established entities with these bills forming the foundation. The purpose of these entities is to consider the technology that lies behind the Security Token Offering (STO) in question and its feasibility. Like other countries such as the US, Gibraltar, and Switzerland, the Malta authorities too ensure compliance with the KYC and AML procedures but they realize that their role is not limited to ruling STOs based on their whitepapers and other documents.
It is clear that STOs based in Malta have a clear advantage in the European Union region.
STO Regulations In Malta: Technology First Approach
Once a token is analyzed in accordance with the Financial Instrument Test introduced under the Virtual Financial Assets Act, if the asset qualifies as transferable security, it must be compliant with traditional financial services legislation.
Malta follows a technology first approach indeed. What matters, according to the officials is the real technology that underlies the project and the whitepaper. The authorities have a mandate to consider the technology that drives the project and examine if it is indeed feasible.
Malta’s membership of the European Union also allows STOs to benefit immensely in that once declared legal in the country, they are automatically deemed compliant in the rest of the EU member states as well.
The crowning achievement of the Maltese government is the enactment of the revolutionary framework for virtual assets and innovative new technology, which strengthen STO regulations in Malta. Furthermore, the Malta Stock Exchange wishes to introduce exchanges based on Distributed Ledger Technology for the trading of security tokens. This will only serve to increase liquidity in the marketplace. Furthermore, the Malta Stock Exchange entered into partnerships with OKEx and Neufund for facilitating security token trading. The verdict is clear: Malta is well on its way to becoming a global leader in STO regulation.