Practice Areas > Investment Services, Fintech & Capital Markets > Blockchain & ICOs > VFA Agents & Systems Auditors
Overview
The enactment of the ‘Virtual Financial Assets’ Act (the ‘VFA Act‘) in November 2018 marked Malta’s rise to prominence as a leading blockchain jurisdiction intent on promoting the scalability of distributed ledger technology whilst ensuring a sufficient degree of investor protection, market stability and regulatory oversight.
A part of Malta’s cutting-edge trident of blockchain laws, the VFA Act, the Innovative Technology Arrangements & Services Act (‘ITAS Act’) and the Malta Digital Innovation Authority Act (‘MDIA Act’) complement each other in the attainment of a comprehensive technology-neutral and future-proof blockchain regulatory framework.
The VFA Agent
What is the role of VFA Agents?
The VFA Act seeks to regulate issuers wishing to issue or list a DLT Asset on an Exchange and other classes of persons seeking to provide services in relation to cryptocurrencies. This entails carrying out a Financial Instrument Test to ensure that the particular DLT Asset can qualify 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 regulations 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 licensed Service Providers under the VFA Act such as VFA Investment Advice, operating a VFA exchange and more.
The applicable legislation has created an entity which will be known in the sector as a VFA Agent. This means that service providers in Malta wishing to assist Issuers or other VFA Service Providers need to be registered with the Malta Financial Services Authority (MFSA) which has set out applicable rules and mechanisms to certify that local agents can provide such a service. This means that not any law, audit firm or the usual standard corporate services provider can fit the role of a VFA Agent unless such entity is registered and approved as such with the MFSA.
Our team of expert lawyers at Gonzi & Associates, Advocates is well suited to assist your organisation with all matters concerning the submission of an application with the MFSA for registration as a VFA Agent.
Systems Auditors
What is the role of Systems Auditors?
Systems Auditors are individuals or legal organisations responsible for assessing innovative technology arrangements requiring certification or licensing under Maltese law. Systems Auditors are regulated by the Malta Digital Innovation Authority (‘MDIA’) and only registered upon fulfillment of strict requirements concerning their suitability for the role.
Systems Audits carried out by registered Systems Auditors may be one of the following types:
- Type 1 Systems Audit: In which a Systems Auditor expresses an opinion as to whether the description of an innovative technology arrangement is fairly presented and whether the controls included in the description are suitably designed to meet the applicable criteria; and
- Type 2 Systems Audit: In which the Systems Auditor expresses the same opinions as expressed in a Type 1 Systems Audit, but which would also include an opinion on the operating effectiveness of the controls during the period covered by the audit.
Our team of expert lawyers at Gonzi & Associates, Advocates is well suited to assist your organisation with all matters concerning the submission of an application with the MDIA for registration as a Systems Auditor.