Cryptocurrencies are still a subject of many discussions and doubts for national governments and banks. Luckily, the FinTech sector is rapidly evolving and countries like Malta do their best to offer their support to the crypto-business. This has led to an announcement that it will be possible to obtain an official license of Virtual Financial Assets Service Provider.
CoinDeal has already started the process and our application has been accepted. The process is really long, complex and costly so as a result many other exchanges dropped out of it. We, however, aim to stick to see it through to the end. This is just one of many ways for us to increase our credibility in the eyes of our users and financial institutions (e.g. banks).
If you are curious what it takes to become a licensed VFA service provider, below is a description of steps that need to be taken. Full guides are available on the Malta Financial Services Authority website - regulator responsible for the process – https://www.mfsa.mt/fintech/virtual-financial-assets/rules
The application process consists of three phases:
Phase one - the preparatory phase
Phase two - the pre-licensing phase
Phase three - the post-licensing / per-commencement of business phase
The Applicant needs to notify the Authority in writing and via email of its intention to apply for a VFA Services License with statement of intent. The statement of intent shall include:
- a comprehensive written description of the proposed structure,
- the VFA Service/s for which Licensing is being sought identifying the persons proposed to hold key positions thereto,
- a legal opinion that the proposed activity does not fall within the scope of traditional financial services legislation.
The Authority will schedule a preliminary meeting with the Applicant. Applicants shall also pay the applicable non-refundable application fee to the Authority, in accordance with the VFA Regulations, when submitting the application form.
Provided that the submission of the application shall be considered complete only upon receipt of all required documentation as well as the verification that the respective application fees have been submitted to the Authority.
Pre Licensing Phase
The Authority shall, upon submission of a complete application, initiate the review of the application and the supporting documentation.
The Authority shall, once it is satisfied with the information set out in the application documentation and the completion of the assessments, issue an ‘in principle Approval’.
Upon satisfaction of the requirements a VFA Services License shall be issued by the Authority.
Post-Licensing & Pre-Commencement of Business
License Holders may be required to satisfy, within set time-frames, a number of post-licensing matters, as determined by the Authority, prior to the commencement of business. The MFSA may vary or revoke any condition of a License as well as impose new conditions thereto.
Provided that, if for any reason the License Holder is not in a position to comply with this condition, it shall notify the MFSA in writing setting out the reason/s for such a delay together with an updated business plan indicating the proposed date of commencement of business. On the basis of the information provided and the circumstances of the case, the MFSA may decide to suspend or cancel the License in accordance with the relevant provisions of the Act.
The License Holder shall also be required to adhere to the applicable Titles of the Rulebook above upon being granted the VFA Services License.