Answer ... While Malta has created a bespoke regime for the regulation of crypto-assets which do not fall under existing regulations, there is no common agreement with other EU member states as to the regulatory status of any crypto-asset issued within a particular jurisdiction. Issuers have no guarantee as to how other jurisdictions would classify crypto-assets which have been regulated under Maltese law; it is highly probable that in order to be offered to citizens of other member states, such tokens would need to undergo a licensing or recognition process in those member states. The lack of harmonisation throughout the European Union is the Achilles heel of any kind of regulation which seeks to regulate these highly cross-border assets. Issuers and regulators are expressing interest in security token offerings and new trading venues for such offerings. While their regulation under traditional financial services laws may gain the trust of investors, such offerings may still be unduly expensive for start-ups. This is why we envisage interest increasing in initial exchange offerings, which would be regulated under the Virtual Financial Assets Act.

At the end of October 2019, the grace period available to service providers operating under the notification provisions in the Virtual Financial Assets Act will expire. This means that all operating service providers, including cryptocurrency exchanges, must meet all licence conditions and have submitted their complete formal licence application by this date.