In preparation for the new European Union (EU) crypto legislation, the Financial Service Authority of Malta has on Monday revealed its plan to remove service providers for Non-Fungible Tokens NFTs from the scope of its 2018 virtual assets law.
In 2018, Malta set up a Virtual Financial Assets (VFA) Act which subjects service providers to an authorization process before the actual unveiling of the project. Providers must also publish white papers of investor information before this unveiling. This means that this regulation would go further than the EU’s Markets in Crypto Assets Regulation (MiCA) which is set to take effect in Malta and across the bloc in 2025.
Explaining the reason for this decision, Malta Financial Services Authority MFSA revealed that the common features of NFTs, majorly their uniqueness and non-fungibility, limit the degree to which they can be used for investment or payment purposes. It further revealed that the inclusion of assets such as NFTs within the scope of VFA’s framework might contradict the main focus of the Act, which sought to regulate investment-type services offered in relation to VFAs falling outside the scope of existing traditional financial service asset categories.
MFSA also stated that other assets that are unique and non-fungible would also be expunged from the VFA Framework.
Elaborating on the stance of the European Union on non-fungible assets, MFSA explained the EU’s upcoming Markets in Crypto-assets Regulation (‘MiCA’), which is expected to enter into force in Spring 2023, will expunge unique and non-fungible crypto assets from its scope as it will eliminate the need for issuance or service provision authorization in relation to NFTs.
However, MFSA revealed that they are open to receiving feedback from “relevant stakeholders” before making the final decision to amend the framework of VFA, which will see the exclusion of NFTs. Interested stakeholders are advised to comment through an online form before the 6th of January, 2023.