Practice Areas > Investment Services, Fintech & Capital Markets > Blockchain & ICOs > Voluntary Certification
Overview
When Malta enacted a comprehensive technology-neutral blockchain regulatory framework in the latter part of 2018, it become one of the first jurisdictions in the world to offer developers of serious innovative technology arrangements a future-proof infrastructure designed to give their technology legal recognition, certainty, and above all a reputable stamp of approval.
Thus, established in November 2018, the Malta Digital Innovation Authority (‘MDIA‘) created a voluntary certification system whereby developers of innovative technology arrangements may apply for voluntary certification. A certificate awarded to an innovative technology arrangement by the MDIA attests the technology’s standards in terms of its legality, integrity, transparency, compliance and accountability.
Eligible Technologies
Which Technologies are Eligible for an MDIA-issued Certification?
Any technology having the characteristics of an ‘innovative technology arrangement‘ is eligible for a voluntary certification issued by the MDIA.
The voluntary certification granted by the MDIA covers a set of core features that are deemed essential to ensure that reasonable standards are met with respect to purpose, qualities, features, attributes, behaviours or aspects of the innovative technology arrangement in question.
What is an 'Innovative Technology Arrangement'?
The following are considered to be innovative technology arrangements:
- Software and architectures which are used in designing and delivering distributed ledger technology which ordinarily, but not necessarily, a) uses a distributed, decentralised, shares and/or replicated ledger; b) may be public or private or hybrids thereof; c) is permissioned or permissionless or hybrids thereof; is protected with cryptography; and f) is auditable.
- Smart contracts and related applications, including decentralised autonomous organisations (DAOs), as well as similar arrangements;
- Any other innovative technology arrangement which may be designated by the Minister responsible for this sector, on the recommendation of the MDIA.
Registration Requirements
Registration Requirements
A successful application for voluntary certification of an innovative technology arrangement is subject to the fulfillment of certain requirements.
General Requirements
An innovative technology arrangement must satisfy general registration requirements intended to meet the standards of legality, integrity, transparency, compliance and accountability.
The applicant (be it a legal person or natural person) seeking certification must prove to the MDIA’s satisfaction that they as well as the technology satisfy these requirements.
Specific Requirements
Furthermore, an applicant must satisfy certain specific requirements, namely:
- Fitness & Properness Test – Both the innovative technology arrangement and the persons behind the innovative technology arrangement must be fit & proper. A innovative technology arrangement is deemed fit & proper if it has the qualities, attributes, features, behaviours or aspects declared. On the other hand, the individual and/or legal organisation behind the technology are deemed fit & proper if they are well suited to carry out the functions for which they are appointed.
- Systems Auditor Report – No certification will be issued unless the applicant appoints a Systems Auditor and procures a Systems Auditor report attesting to the innovative technology arrangement’s standards in respect of its specific purposes, qualities, features, attributes, behaviours and aspects. Expected standards are measured against detailed guidelines issued by the MDIA for such purpose.
- Appointment of Technical Administrators – All innovative technology arrangements must have an MDIA-registered Technical Administrator in office at all times. The role of the Technical Administrator is to intervene in an effective manner in the event of a material breach of law by the innovative technology arrangement.
- Compliance with Applicable Law – An applicant would need to demonstrate how the innovative technology arrangement meets obligations imposed by law, including AML/CFT laws, laws on the protection of personal data, and consumer rights laws.
- Adequate Disclosures – Finally, the applicant must show that the innovative technology arrangement in question adequately discloses the technology’s specific purposes, qualities, features, attributes, limitations, conditions, terms of service and behaviours to all users and prospective users.
Resident Agent
Appointment of Resident Agent
An applicant not habitually resident in Malta will be required to appoint a Resident Agent.
Gonzi & Associates, Advocates, may assist in the appointment of a Resident Agent.
Certification Process
Voluntary Certification Process
Costs & Fees
Quick Overview
The acquisition of a voluntary certification for an innovative technology arrangement involves the following costs and fees:
- A Processing Fee
- A Registration Fee
- Administrative Fees (where applicable)
- Professional Fees due to Key Functionaries
Processing Fee
Stage 1 – Upon submission of an application for voluntary certification of an innovative technology arrangement, a one-time Processing Fee of €2,000 is payable.
Stage 2 – Upon submission of a Systems Auditor’s report leading to certification, a one-time Processing Fee of €3,000 is payable.
Certification Fee
A certification fee of €40,000 is payable upon certification of an innovative technology arrangement. Certification is valid for two years, at the expiration of which the fee referred to above shall be due.
Professional Fees
Other fees an applicant may want to consider before submitting an application for voluntary certification of an innovative technology arrangements are fees required for the appointment of certain professional Key Functionaries, including:
- Resident Agent;
- Technical Administrator; and
- Systems Auditor,
Administrative Fees
Other administrative fees due to the MDIA may be applicable in the following cases:
- Appointment of Resident Agent – €250
- Fee in relation to a material change in software – €1,000
- Fee in relation to a material change in rights of users – €500
- Fee in relation to a material change in rights, authorisations or powers of Technical Administrators or MDIA, payable by the applicant – €500
- Fee in relation to a material change in the ITA’s Technical Administrator – €500
- Fee in relation to a material change in the Administrator of an ITA’s legal organisation – €1,500
- Fee in relation to a material change in the Qualifying Shareholders of an ITA’s legal organisation – €1,500
How we can help
Gonzi & Associates, Advcocates, has extensive experience in the blockchain and authorisations space and is able to provide specialised assistance to your business at all stages of the ITA voluntary certification application, including:
- Malta Company incorporation and registration;
- Assistance in the collection & preparation of documentation necessary for application submission, including fitness and properness assessments;
- Drafting Maltese-law aligned T&Cs governing the provision of your services;
- Assisting in the identification and appointment of Key Functionaries, including Systems Auditor, Technical Administrators and Resident Agents;
- Registration of your trade mark in the Malta trade mark register and the register of the European Union Intellectual Property Office as necessary;
- Providing general legal advice and assistance as required.