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MFSA answers questions about issuing share tokens in Malta

MFSA answers questions about issuing share tokens in Malta

The Malta financial services authority (MFSA) has issued a statement providing answers to questions regarding token-share offerings on the island.

In the document
Malta’s financial regulator has answered the main questions received from participants in the cryptocurrency market about how problems arising from offers of token shares (STO) “can be solved in a way that does not stifle innovation.”

In July 2019, a consultation process was launched aimed at establishing “legal certainty” and identifying the problems of the blockchain-based securities industry in the Maltese financial markets. The consultation ended in September 2019, when MFSA received feedback from 18 industry participants, including national agencies, consulting and law firms, and technology providers.

The MFSA focused on the consequences of STOs under European Union law, including the Markets in financial instruments Directive and the market abuse Regulation. In its conclusion, the regulator notes that settlement of settlements based on a distributed registry could provide a “workable solution”.

The office adds that according to some respondents, if there are no changes at the EU level related to the rules of Central securities depositories (CSD), there are obstacles to the implementation of the technology.

Existing rules require that transferable securities listed on a trading platform be registered in CSD journals. This means that the projects ‘ambitions to eliminate the Depository as an intermediary from operations are impossible without “optimizing” the legislation for distributed registries.

The office also notes that although respondents provided many feedback on transactions involving securities, little was said about the monetary side of settlements.

“Certain problems must be resolved before the secondary market trading tokens-shares can actively develop,” the regulator writes.

Last week, the MFSA reported that the Binance exchange is not regulated by local authorities and does not have a license in Malta. At the same time, Changpeng Zhao denies having a headquarters in Malta.