Open a Cryptocurrency Company in Malta

The development of the financial technology industry has led to the creation of digital money which can be used to purchase items on the Internet. Digital money is usually referred to as cryptocurrency.

Most European countries allow the use of cryptocurrencies even if they have not put in place a specific legal framework related to trading digital money and Malta is no exception to this. Investors who want to open cryptocurrency businesses in Malta must register one of the available types of structures allowed by the Commercial Law. Once registered, the Maltese company will need to comply with the recently-enabled cryptocurrency regulations which provide for various types of activities related to virtual money.

Our lawyers in Malta can offer information on the legislation governing the financial industry in this country. We offer personalized solutions to those who want to set up companies in the cryptocurrency or other sectors in Malta.

Cryptocurrency legislation in Malta

As mentioned at the beginning of this article, it has passed long since the Maltese Government in collaboration with the Malta Financial Services Authority (MFSA) has created the first set of laws regulating cryptocurrency-related activities.

 These laws are made of:

• -          the Digital Innovation Authority Law, which is the first competent authority to govern crypto-related activities in Malta;
• -          the Innovative Technology Arrangement and Services Act which provides for the services offered by such businesses;
• -          the Virtual Financial Assets Law which acknowledges digital tokens as financial instruments;
• -          the Anti-Money Laundering regulations also need to be respected by crypto businesses.

Together, these form the Digital Innovation Framework which was enabled in the first part of 2018.

Choosing the right business form for a crypto business in Malta

The first step for opening a cryptocurrency company in Malta is to select a business form under which it will operate. The sole proprietorship and the private limited liability company are usually employed for such activities, considering cryptocurrency companies are set up as small and medium-sized businesses.

The following aspects need to be considered when opening a Maltese cryptocurrency business:

• -          how large the business will be – small businesses require simple business forms;
• -          the activities the company will undertake – there are various activities which can be completed;
• -          if the cryptocurrency company will need a license (some businesses do not need such permit);
• -          the amount of money the owner wants to invest – the LLC needs at least 1,200 euros to start.

You can also consult with our law firm in Malta on the best business form for setting up a cryptocurrency business. Our lawyers will advise on the legal requirements of such a business venture based on your investment needs.

Registering a cryptocurrency company in Malta

In order to create a Maltese cryptocurrency business, a local or a foreign investor must draw up the paperwork related to the incorporation of the company and file them with the Trade Register. It should be noted that cryptocurrency companies are not deemed financial companies, therefore the requirements applicable to investment companies, for example, will not apply to cryptocurrency ones. However, it is recommended to ask for assistance from a Maltese law firm when registering this type of business here.

Licensing of cryptocurrency businesses in Malta

The MFSA is in charge of the licensing procedure of those interested in opening cryptocurrency companies in Malta. The license will be issued after the company has passed the test imposed by the MFSA. This implies filing a prospectus which must contain accurate information about the virtual token.

The license is issued for specific cryptocurrency activities, among which:

• -          Initial Coin Offerings or ICOs which will be assessed based on their prospectus;
• -          cryptocurrency exchanges which will be assessed on whether the tokens to be trader are considered virtual money.

It should be noted that when operating under the licensing rules imposed by the MFSA, cryptocurrency companies are required to appoint advisors under the Virtual Financial Assets Regulations.

There are also other activities undertaken by cryptocurrency companies which need no authorization in Malta. Among these IT companies established for activities related to mining for the creation of new tokens.

Our Maltese lawyers can offer more information on the licensing requirements applied when setting up a cryptocurrency company, based on the new regulations imposed by the MFSA.

The progress of cryptocurrency in Malta

Malta is slowly but surely becoming a recognized financial center in Europe thanks to the facilities the authorities offer to foreign investors. This one of the main reasons why the use of cryptocurrency has gained popularity here. Moreover, according to recent reports, the government strongly believes in the potential of blockchain technology which allows the creation of digital currency which is why at the beginning of the year it launched the Blockchain Strategy.

The main purpose of the program is to attract blockchain companies in Malta to create electronic systems which can be used by the authorities in order to reduce bureaucracy.

Those interested in opening a cryptocurrency company in Malta will also be happy to know that soon the Malta Gaming Authority could allow online casinos to accept digital money as a method of payment.

Taxation of cryptocurrency companies in Malta

While there is no specific law for the taxation of cryptocurrency transactions, Maltese companies involved in such activities will be subject to the corporate tax and thus benefit from very advantageous conditions which provide for multiple tax exemptions and deductions.

We remind foreign investors that the corporate tax in Malta is set at a flat rate of 35%, however, it has a full imputation system under which this rate will decrease considerably.

Why open a cryptocurrency company in Malta?

Malta was one of the first countries in the world and the European Union to create a specific law for cryptocurrency-related activities and thus acknowledging their importance and their role in future transactions.

Those who want to open cryptocurrency companies in Malta can choose between various types of activities, which do not necessarily need to undergo obtaining a specific license from the MFSA. During the last few months, the authorities have also created the premises for those interested in setting up gambling activities which accept virtual money as means of payment.

Considering the fast development of the fintech sector in Malta, we invite you to contact us if you need assistance in starting a cryptocurrency business. No matter the industry you decide to operate in, you can rely on our attorneys in Malta for assistance in registering a company.