Malta: Initial Coin Offerings

02 March 2020

Initial Coin Offerings (ICOs) are defined, under Maltese Laws, as Initial Virtual Financial Asset Offerings (IVFAOs).

Issuers of VFAs are subject to the Virtual Financial Assets (VFA) Act and the rules found in Chapter 2 of the Virtual Financial Assets Rulebook, entitled ‘Virtual Financial Assets Rules for Issuers of Virtual Financial Assets’, and thus must adhere to the general high-level principles found therein when carrying out their function. This includes, inter alia, performing duties in an ethical manner, acting honestly, fairly and professionally, whilst considering the investors’ best interests at all times.

The starting point in launching an IVFAO in Malta should always be the determination and classification of the token in question. Promoters can only opt for an IVFAO under the VFA Act if the token in question qualifies as a VFA and such determination has to be endorsed by the VFA Agent.

In order to issue a VFA in or from within Malta, an Issuer does not need a license, but must, through a VFA Agent licensed in Malta, register a Whitepaper with the MFSA, in addition to adhering to other mandatory conditions. Once the Whitepaper is registered, the Issuer can either launch the VFA or proceed with the admission of the VFA to trading on a Distributed Ledger Technology (DLT) exchange.


An issuer shall appoint and have at all times appointed the following Functionaries who shall have sufficient knowledge and experience in the field of information technology, DLT assets and their underlying technologies and have a good understanding of the Issuer’s business. These Functionaries may need to be approved by the MFSA:

VFA Agent

An issuer of an VFA must at all times have a VFA Agent in place.
The initial role of the VFA Agent shall be that of:

  • performing the Fitness and Properness Assessment;
  • reviewing and endorsing the Financial Instrument Test;
  • compiling and submitting of the application pack;
  • ensuring that the Issuer fulfils all the requirements prescribed by the VFA Act and rules and regulations issued thereunder; and
  • liaising at all times with the MFSA.

Post issuance of the VFA, the role of the VFA Agent is that of ensuring that the issuer is complying with the VFA Act and meeting its obligations, including the fulfilment of annual and ongoing compliance obligations.

Systems Auditor

The Systems Auditor (SA) will review and audit the Issuer’s Innovative Technology Arrangement (ITA) including cyber security arrangements and issue a report prior to the launch of the VFA. The SA is also responsible for preparing annual systems audit report confirming that the Issuer’s ITA is in compliance with guidelines issued by the Malta Digital Innovation Authority (MDIA).


The Custodian must be independent from the Issuer and must have appropriate systems and controls to ensure that investors’ funds are reimbursed if the IVFAO is cancelled. The following persons may be appointed as custodians of VFAs: a third party licensed VFA Service Provider, or who is exempt from licensing under the VFA regulations; a third party constituted in a recognised jurisdiction; and for fiat currencies: a central bank; a credit institution authorised in accordance with the provisions of Directive 2013/36/EU; a bank authorised in a third country; a money market fund; an electronic money institution; or a payment institution.


The role of the auditor is to audit the Financial Statements of the Issuer and to prepare a management letter in accordance with International Standards on Auditing at the end of each annual accounting period.


An MLRO is responsible for issuing policies and ensuring that the systems in place cater for all AML procedures. Moreover, the MLRO has to ensure that, when appropriate, the information or other matters leading to knowledge or suspicion, or reasonable grounds for knowledge or suspicion of money laundering is properly disclosed to the FIAU. The MLRO is the main contact point between the issuer and the FIAU. Moreover, he must ensure that the issuer is complaint with all AML / CFT obligations.

Fees payable to the MFSA for the issuance of a VFA in or from within Malta:

  • €8000 One-Off Fee payable to the Malta Financial Services Authority upon submission of the White Paper
  • €2000 Annual Fee payable to the Malta Financial Services Authority upon the submission of the certificate of compliance

Contact Rudolph Psaila to find out more.

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