Malta has taken a very progressive approach to cryptocurrencies, positioning itself as a global leader in crypto regulation.
While cryptocurrencies are not legal tender, they are recognized by the government as “a medium of exchange, a unit of account, or a store of value”. Malta has no specific cryptocurrency tax legislation, nor is VAT currently applicable to transactions exchanging fiat currency for crypto.
Cryptocurrencies: Not legal tender
Cryptocurrency exchanges: Legal, regulated under the VFA Act
Cryptocurrency exchanges are legal in Malta and, in 2018, the Maltese government introduced landmark legislation to define a new regulatory framework for cryptocurrencies and address AML/CFT concerns. The legislation comprised of three separate bills which set a global precedent by establishing a regulatory regime applicable to crypto exchanges, ICOs, brokers, wallet providers, advisers, and asset managers.
The three bills are:
- Malta Digital Innovation Authority Act
- Innovative Technological Arrangement and Services Act
- Virtual Financial Asset Act
MDIA was passed so it can act as the centralized point of authority for controlling technological development, which includes blockchain and cryptocurrency. This is achieved by enforcing ethical standards and a streamlined process when using cryptocurrency and blockchain technology.
ITAS established the regime for the future registration and accountability of blockchain service providers – including cryptocurrency – by imposing requirements for audit. This means that cryptocurrency business providers must now operate under stricter rules.
VFAA set a global precedent by establishing a regulatory regime applicable to cryptocurrency exchanges, ICOs, brokers, wallet providers, advisers, and asset managers. Its aim is to support the innovation of cryptocurrency while protecting investors, financial market integrity and financial stability.