Practice Areas > Investment Services, Fintech & Capital Markets > Blockchain & ICOs > ICO Licensing > Legal Basis
Incorporation of a Malta company
Who Can Register a Whitepaper with the Malta Financial Services Authority?
Subject to the fulfillment of certain Malta ICO requirements, including the registration of a whitepaper with the Malta Financial Services Authority (‘MFSA‘), any legal person may issue virtual financial assets. As such, as per the VFA Rulebook, an issuer must be a legal person duly formed under Maltese law. Typically, an integral part of the registration of a whitepaper with the MFSA will be the incorporation of a Maltese company.
Gonzi & Associates, Advocates, together with its related company, GA Corporate, may assist with the incorporation of a Maltese company.
Registration of a Whitepaper
Requirement to Draw a 'Whitepaper'
Issuers may not conduct an ICO and, by extension, issue cryptocurrencies, unless they draw a whitepaper which comply with all legal requirements. In general terms, a whitepaper must contain information which is necessary to enable investors to make an informed assessment before investing in the issued cryptocurrency. The information must be presented in easily analysable and comprehensible form.
Moreover, a whitepaper issued by an Issuer must include a statement by the Issuer’s board of directors confirming that the whitepaper complies with all legal requirements.
Cryptocurrency Determination
'Financial Instrument Test'
The issue of cryptocurrencies through Malta-registered ICOs entail the carrying out of a Financial Instrument Test to ensure that the particular cryptocurrency being issued qualifies as a ‘Virtual Financial Asset‘ and not as other excludable categories which are: E-money, Transferable Securities or Virtual Tokens. The latter categories are regulated under other specific financial or investment Services laws whilst Virtual Tokens are unregulated.
This means that the local approach has created a sui generis category known as the Virtual Financial Asset or VFA which can then serve as the recepient of various services offerred by recognised entities, including ICOs.
As a leading blockchain law firm, Gonzi & Associates, Advocates, is well suited to offer legal opinions on the nature of your DLT tokens and to advise how your cryptocurrency may be structured to qualify as Virtual Financial Asset.
Board of Directors
Dual-control Principle
Pursuant to the ‘dual control’ principle, the business of an Issuer must be effectively directed or managed by at least two persons who must be capable of demonstrating sufficient knowledge and understanding of the Issuer’s business. The Issuer’s board of directors would also be responsible for ensuring that the Issuer complies with all obligations under the VFA Act, the VFA Regulations and the VFA Rulebook.
Key Functionaries
Appointment of Key Functionaries
An Issuer must appoint, and have at all times in place, the following Key Functionaries:
- A VFA Agent – Responsible for submitting the Issuer’s whitepaper for registration and to act as the Issuer’s main point of contact for all communication with the MFSA.
- A Systems Auditor – Responsible for reviewing and auditing the ICO’s underlying technology, including the Issuer’s cyber security arrangements, and for drawing a ‘Systems Audit Report’ confirming that the controls of the technology employed by the Issuer are suitably designed to meet the applicable MDIA-issued standards.
- A Custodian – Responsible for the safekeeping of an Issuer’s assets and investors’ funds.
- An Auditor – Responsible for carrying out his functions as auditor of the Issuer
- A Money Laundering Reporting Officer – Responsible for ensuring the Issuer’s compliance with the applicable anti-money laundering laws, regulations and rules.
Internal Governance
Cyber-Security, Record Keeping and I.T Infrastructure Arrangements
An Issuer must establish a Cyber-Security Framework which must include information and data security roles and responsibilities, an access management policy, a sensitive-data management policy, a threats management policy, a business continuity plan, and a response and recovery plan.
From a record-keeping perspective, the Issuer must ensure that it keeps all documents and information in a manner that facilitates compliance reviews by the MFSA. With regards to the maintenance of its I.T infrastructure, the Issuer must ensure that its infrastructure ensures the integrity and security of the data stored therein, the availability, traceability and accessibility of data, as well as privacy and confidentiality of information.
The I.T infrastructure must be located in Malta and/or any EEA member state, or in any other third-country which the MFSA may deem suitable. In any case, if the I.T infrastructure is not located in Malta or in a cloud environment, the Issuer must ensure that the data is replicated real time by a live replication server located in Malta.
Fees and Costs
Regulatory Costs
Apart from professional fees due to Key Functionaries, Issuers are also subject to a one-time whitepaper registration fee and an annual supervisory fee.
More about the 'FIT' ICO Licence Fees & Costs
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How we can help
Gonzi & Associates, Advcocates, has extensive experience in this field and is able to provide specialised assistance to your business at all stages of the Malta ICO licence application procedure, including:
- Malta Company incorporation and registration
- Drafting of legal opinions on the legal nature of your cyrptocurrency to determine the applicable legal framework
- Collection & preparation of documentation necessary for submission of an ICO licence (registration) application
- Advising and assisting in the drafting of a whitepaper
- Drafting of ICO offering T&Cs
- Assisting in the engagement of Key Functionaries, including VFA Agent, Systems Auditors, Money Laundering Reporting Officers (MLROs), director/s, auditors, and so on
- Guiding through every stage of the whitepaper registration process
- Providing post-registration follow-up assistance, including advising on applicable annual compliance exercises.