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The Malta Financial Services Authority Launches Consultation Document Directed at Regulating Collective Investment Schemes in Virtual Currencies

The Malta Financial Services Authority (MFSA), a single regulator in the field of financial services in Malta, has published a consultation document which assumes official start of the process for the regulation of collective investment schemes in virtual currencies.

The launch of the consultation document provides for the adoption of the regulatory approach by the MFSA in relation to this sector of the digital economy and, simultaneously, provides market participants with a possibility to design a platform for certain categories of investors willing to invest in virtual currencies.

As for the draft rulebook, which is a part of the consultation document, such schemes should be initially developed in accordance with the laws of Malta or as SICAV (open-ended investment company with variable share capital) or INVCO (closed-ended investment company with fixed share capital). Although the former structure, as a rule, serves as a legal means of choice for promoters desirous of creating a fund structure within the jurisdiction.

Another significant nuance emerging from the consultation document is the MFSA’s position, initially directed to allow collective investment schemes, constituted as Professional Investment Funds, to make investments in virtual currencies as their main activity, however at the same time the MFSA has announced that at present it is considering the possibility of extending this system to Alternative Investment Funds with notification.

After launching the consultation process, the MFSA also referred the industry to the statements published by the European Securities and Markets Authority on the risks related to the cryptocurrency, investors and investment firms.