Initial Coin Offering in Malta

Cryptocurrencies are the latest trend in the business world, including in Malta. Moreover, compared to other jurisdictions, Malta has even set out regulations for the issuance of initial coin offerings (ICOs) through the Malta Financial Services Authority (MFSA). Even if at the moment the rules were issued for public consultation, it should be noted that this the first step towards creating a legal framework related to the issuance of initial coin offerings in Malta.

Our law firm in Malta can explain the current legislation applicable to investment funds which also partially covers ICOs.

Definition of initial coin offering according to the Maltese laws

The Maltese legislation recognizes the issuance of initial coin offerings as campaigns through which companies raise capital for their ongoing activities. Unlike other jurisdictions, Malta has created a bridge between ICOs and crowdfunding which is why it was easier for the authorities to draw up the regulations which in the near future could become laws for the creation and sale of initial coin offerings.

At the moment, Maltese ICOs are treated just like investment funds and can be sold to professional investors and it is known that the country has one of the strictest but also advantageous legal frameworks in the EU with respect to investment funds.

The creation and sale of virtual currencies in Malta

Foreign and local investors who want to issue initial coin offerings in Malta must first set up companies and then create and market the digital tokens they want to sell. ICOs in Malta can be traded as financial instruments or can be sold in exchange for shares in a company which is why in certain cases, the regulations apply just like in the case of investment funds.

These rules imply:

• -          the manager organizing the ICO must have sufficient knowledge and experience with ICOs;
• -          the company must issue a warning prospect related to the risks of purchasing digital tokens;
• -          a verification of the risks related to the issuance of the initial coin offering;
• -          an evaluation of the company issuing the virtual currency.

We remind you that at the moment these are proposals related to the issuance of ICOs in Malta.

For assistance in setting up a company for the issuance of ICOs, please contact our Maltese lawyers.