By Michael Scott
Malta announced plans to revise the treatment of nonfungible tokens from the country’s framework for virtual financial assets. The recent Malta Financial Services Authority (MFSA) announcement confirmed reviewing requests to adjust the regulatory treatment of NFTs.
MFSA admits that NFTs derive their legal recognition from the Virtual Financial Assets Act (VFA). Besides NFTs, the current regulatory framework recognizes electronic money, virtual tokens, and financial assets. The framework considers the categories as either established or dependent on distributed ledger technology (DLT).
Request to Review NFTs Inclusion in the VFA Framework
MFSA announced receiving requests to eliminate NFTs from the current VFA framework indicating they are nonfungible and distinct. Further, the promoters of the review consider NFTs incapable of use as payment means to invest or purchase products and services.
MFSA considers NFTs inclusion in VFA scope violates the intended spirit. It added that the Act aimed to regulate investment types beyond the scope of conventional financial asset categories. This consideration informs the decision by MFSA to invite proposals from stakeholders before adopting the new revisions.
The announcement to review the existing treatment of NFTs affirms Malta’s maturity in approving cryptocurrency regulation beyond ordinary reach. Malta’s active participation in crypto regulation has been evident since 2018, when parliament approved 3 laws. The Maltese parliament aimed to deliver a comprehensive regulatory framework supporting digital currencies and blockchain innovation.
Malta’s Commitment to Enhance Crypto Regulation
The scrutiny of cryptocurrency regulation in Southern Europe ranked Malta top in November, citing the comprehensive regulatory context provided by VFA Act. The assessment conducted by MFSA lauded the Maltese parliament’s input to enact the law, whose provisions recognize clear categories for initial coin offerings and digital currencies as distinct from digital assets.
Besides, the governing authority acknowledges clarity derived from the Innovative Technological Arrangements and Services Acts to facilitate the Malta Digital Innovation Authority with oversight roles to the service providers utilizing the blockchain technologies.
The recent decision by MFSA to accept requests to review the categorization of NFT portrays a commitment to nurturing Malta as a crypto hub. Adjusting the current financial regulatory framework will clarify NFTs’ distinct features from the digital assets categories. The clarity will extend to defining a set of rules applicable to NFTs.