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Malta Mulls Virtual Currency Regulation

by Mike Godfrey, Lowtax.net, Washington
26 October, 2017

Malta's financial services regulator, the Malta Financial Services Authority, is consulting on a framework for the regulation of virtual currencies.

The Authority is developing a rulebook to regulate Professional Investor Funds (PIFs), which have investment in virtual currencies as their investment objective, and is considering whether Alternative Investment Funds and Notified Alternative Investment Funds should also be allowed to invest in virtual currencies.

In view of the risk associated with the investment model of collective investment schemes investing in virtual currencies, it has been decided that, for the time being, the legal structures for PIFs making such investments should be limited to SICAV and INVCO structures, which are required to have a board of directors responsible for the overall conduct of business of the collective investment scheme.

The rulebook, which has been published for consultation, builds on the existing rules applicable to PIFs and adds further rules to mitigate the potential risks of investing in virtual currencies. The main proposals introduced within this new rulebook aim at safeguarding the interests of investors and the integrity of the financial market in the context of virtual currencies, the regulator said.

In this regard, the rulebook imposes specific requirements on the governing bodies of the collective investment schemes and, in certain instances, the collective investment schemes' service providers, in relation to competence, risk warnings, quality assessment, risk management, and valuation.

The Authority has asked for feedback on the rulebook, which should be submitted by November 10, 2017.

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