As the financial technology industry has developed greater and faster tools with the internet, blockchain technology was created. This has created the ability to pay for services and goods online with completely digital money. It is commonly referred to as Cryptocurrency.
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While most European countries have not yet developed the legal framework to allow the trading of cryptocurrency (whether for financial markets, or as a trade for goods and services), they still allow it, and Malta is no exception to this rule. At the moment, the only recourse that entrepreneurs have, if they want to open a Cryptocurrency business in Malta, is to register under a Commercial Law structure when starting their initial coin offering.
Registering your Cryptocurrency company in Malta – Initial Coin Offering
If you want to incorporate your Cryptocurrency company in Malta, you must fill in all required paperwork for the formation of a company and fill it at the Trade Register. It is highly recommended to speak to a law firm in Malta while doing this with a Cryptocurrency based business, because Cryptocurrency based businesses are not considered financial companies in Malta. This means the requirements to open yours are very different to opening any other type of financial business.
Cryptocurrency progress in Malta
Due to Malta’s open policy towards foreign investors, it is growing steadily as a respected financial centre in Europe. As this has developed, so has the popularity of Cryptocurrency among the business world and wider populace. In tandem with this, the government has shown their support in the potential of Blockchain and its use cases. The Maltese government officially launched its Blockchain Strategy at the beginning on this year in order to embrace digital currency and grow with it.
The primary aim of the Blockchain Strategy is to enable cryptocurrency businesses based in Malta to create systems that the authorities can use to reduce bureaucracy. This should enable both the companies and the government to be more efficient.
If you would like to open a Blockchain enabled business in Malta, it might interest you to know that the Malta Gaming Authority will soon allow online gaming sites and casinos to accept Cryptocurrency as a form of payment!
Any financial services activities come under the jurisdiction of the MFSA – Malta Financial Services Authority, which deals with all regulation for companies based in the industry. The MFSA supervises and accredits financial companies of all types in Malta, such as trusts, insurance companies, credit unions, investment companies, brokerages and initial coin offering. The MFSA is also entrusted with the Maltese Registry of Companies.
How to apply for a Maltese financial license
Any investors & entrepreneurs, whether foreign or local, must apply for a financial service license with the MFSA if they would like to set up a financial institution in Malta. The company is then required to gain a financial institution license and must meet the following requirements:
- There must be at least two directors of the cryptocurrency company based in Malta,
- The company must be solvent and have its own monetary funds. The MFSA will look into this in each case to ensure this is met.
- Any shareholders must ensure the management of the company is scrutinised
You will also need the following documents to set up your financial company in Malta:
- Proof of the registered office
- Audited financial documents from the last three years
- A copy of the articles of association of the company
- A description of the internal control of the company
- A business plan
- A business objective
- A proposed share capital
- Copies of the shareholders, directors and company representatives’ passports
The NACE codes for providing financial services within Malta
Finally, when you have registered your financial company in Malta, you must select an NACE code as part of the Nomenclature for Economic Activities. This is so you can label your company within the legislation. In section J, you can find the following NACE codes for financial companies:
- 65: financial intermediation
- 65.1: monetary intermediation
- 65.11: central banking
- 65.21: financial leasing
- 65.22: credit granting
- 66: insurance and pension funding
- 66.01: life insurance
- 66.02: pension funding
- 66.03: non-pension funding
- 67: activities auxiliary to financial intermediation
- 67.11: administration of financial markets
- 67.12: security broking and fund management