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MFSA Issues Rules for Collective Investment Schemes investing in Virtual Currencies

30.01.2018

On the 29th of January 2018 the Malta Financial Services Authority (MFSA) issued a Circular to the Industry on the Supplementary Conditions applicable to Collective Investment Schemes Investing in Virtual Currencies. The said rules provide a regulatory framework which strikes a balance between ensuring investor protection, preserving market integrity, whilst providing players in the funds industry with adequate guidance applicable to collective investment schemes which directly or indirectly invest in virtual currencies. 

The salient features of the new rules include, inter alia:

  1. The need for officers and service providers of the scheme to have experience in the field of VCs and DLT;
  2. Submission of additional documents at application stage shall include an assessment undertaken by the governing body of the scheme which denotes that all service providers appointed and all officers appointed have the relevant experience and knowledge in VCs and DLT;
  3. An enhanced emphasis on the independent nature the investment committee must possess including the need for an expert on VCs and DLT;
  4. Portfolio managers must perform frequent quality assessments which must be recorded;
  5. The scheme must perform and record liquidity and stress tests periodically;
  6. An external valuer must be appointed to value and verify the scheme’s worth; and
  7. The prospectus must cater for risks and risk warnings which are specifically attributable to VCs.

A full version of the document can be found here:
https://www.mfsa.com.mt/pages/readfile.aspx?f=/files/Announcements/Circulars/Securities and markets/Collective investment Scheme/2018/20180129_VCPIF Circular fin.pdf

Should you have an interest in the matter, please feel free to contact our legal team on kyle.scerri@nexiabt.com or beverly.tonna@nexiabt.com