Obtaining a crypto license in Malta

08.04.2024

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To receive a license that gives an opportunity for companies to operate legally in the crypto industry in Malta is one of the essential steps to begin with. In regard to crypto activity regulations, Malta, always known for its progressive approach, gives lots of perks.

Initiating the process of securing a cryptocurrency license in Malta unveils a plethora of privileges that play a pivotal role in fostering the growth and prosperity of a business operating within the decentralized industry. This detailed exploration provides an extensive overview of these noteworthy advantages, offering insights into the diverse array of benefits awaiting companies as they navigate the intricate landscape of cryptocurrency operations in this promising country.

Legality of Operations: A company with a crypto license in Malta has the right to conduct cryptocurrency operations legally. This means it can engage in the buying, selling, exchanging, and storing of cryptocurrencies as stipulated by local norms and requirements.
Customer Trust: Possessing a crypto license in Malta demonstrates a high level of professionalism and adherence to standards in the cryptocurrency field. The company becomes a trusted intermediary capable of ensuring the security and reliability of its clients' financial transactions. This helps attract new customers and retain existing ones.
Favorable Tax Regime: Malta offers an attractive tax regime for cryptocurrency companies, which may include exemptions from or reduced rates of corporate income tax. Such a tax regime encourages investment inflow and stimulates the evolvement of the crypto activity on the island.
Reputation and International Recognition: Malta is among the leading countries actively regulating and supporting innovations in the cryptocurrency field. A company holding a crypto license in Malta gains an advantage over competitors due to the high reputation and international recognition associated with Maltese regulation.
Access to Banking Services: Cryptocurrency companies in Malta may find it easier to access banking services, facilitating their operational activities. The crypto license confirms the company's compliance with standards and requirements set by financial institutions, potentially aiding in establishing banking relationships.

The set of privileges makes obtaining a crypto certification in Malta an attractive option for companies seeking to engage in the cryptocurrency business. It provides legal protection, operational legality, tax benefits, and customer trust, stimulating the successful development and growth of the company in the dynamic and innovative cryptocurrency sphere.

Crypto regulation and VFA law

The control of cryptocurrency in Malta is a crucial component of the development and support of innovation in this area. At the core of this regulation is the Virtual Financial Assets Act, which was introduced with the purpose of ensuring the effective functioning of the cryptocurrency market and the protection of the interests of all participants.

The VFA Act establishes the fundamental standards and requirements that companies engaged in cryptocurrencies in Malta must adhere to. It defines the concept of virtual financial assets and introduces regulatory measures for their trading, storage, and exchange. The law also regulates the activities of Virtual Financial Assets Service Providers (VFSPs), including cryptocurrency exchanges, crypto-trading platforms, and crypto-wallets.

One key aspect of the VFA Act is the mandatory licensing of companies wishing to conduct cryptocurrency operations in Malta. The license grants companies the right to conduct their activities legally and securely in accordance with the law. To obtain a license, companies must undergo a registration process and obtain approval from the Malta Financial Services Authority (MFSA), the primary regulator of financial services in Malta.

The VFA Act also establishes specific rules and mechanisms for obtaining and maintaining a license. Companies seeking a license must submit documentation, including a business plan, a description of their activities, security policies, and procedures, as well as compliance with anti-money laundering legislation. Additionally, information about the company's leadership, owners, and controlling entities is required.

Exploring Cryptocurrency Licensing Through a Business Lens

In the process of obtaining a decentralized currency license in Malta, companies turn to two essential entities: the Malta Financial Services Authority (MFSA) and the Malta Digital Innovation Authority (MDIA). Let's delve into their distinct functions and examine how their collaboration shapes the regulation and promotion of innovation in the cryptocurrency sector.

The MFSA: Steering Financial Oversight

At the forefront of regulatory governance is the MFSA, the primary regulator overseeing Malta's financial sector. Its mandate includes issuing licenses for crypto-related activities, making it a pivotal gatekeeper for companies entering the cryptocurrency landscape. Through meticulous evaluations, the MFSA ensures that prospective companies adhere to established standards and requirements. Going beyond the licensing phase, the MFSA actively monitors licensed entities, safeguarding the comprehensive interests of users and investors.

The MDIA: Pioneering Blockchain Advancements

Conversely, the MDIA bears the responsibility of regulating and propelling state-of-the-art blockchain technologies in Malta. This involves establishing a conducive infrastructure and ambiance for the development of innovative projects, including those within the tokenized realm. With a focus on recruiting skilled blockchain professionals, the MDIA aims to foster an ecosystem that nurtures the thriving development of cryptocurrency activities within the country.

Requirements for obtaining a crypto license:

Detailed enterprise information: description, structure, legal status, location, etc.
Profound development plan: decomposition of company's goals, main services description, development and marketing strategy, leads or potential customers acquisition, etc.
KYC/AML Policy: readiness to adjust company's policy according to Anti-Money Laundering international laws; in-depth implementation of KYC policy
Financial Information: Submission of financial reports, including accounting statements, balance sheets, income and expense reports, as well as future financial performance forecasts.
Management Documents: Provision of information about the qualifications and professional reputation of the company's management, including their resumes, certificates, and recommendations.
Founding Documents: Submission of notarized founding duplicates, articles of association, memorandum, activity contracts
Ownership Documents: Provision of information about the founders and beneficiaries of the company, personal details, documents confirming their legitimacy and reputation.
Positive references from banks, professional associations, or other regulatory bodies that can confirm the company's impeccable reputation and its compliance with requirements.

Several kinds of licenses that companies can get in Malta:

Initial Coin Offering Licenses: permit companies to conduct ICO and raise funds based on blockchain technology.
Virtual Exchange Licenses: These licenses enable companies to provide cryptocurrency exchange services in Malta.
Service Provider Licenses: allow companies to offer a wide range of crypto services, including the storage and management of client assets, conducting payment services, etc.

Deciphering numbers: An In-Depth Tax Manual

An island of Malta has positioned itself as a global center for cryptocurrency enterprises, presenting an inviting business atmosphere coupled with a progressive regulatory system. As businesses immerse themselves in the progressing realm of digital assets on this Mediterranean island, grasping the intricacies of taxation becomes essential. This concise and thorough guide provides insights into the taxation landscape for cryptocurrency firms in Malta, presenting key facets and considerations.

Corporate Revenue Levy:

The standard corporate income tax rate stands at 35%. Nevertheless, cryptocurrency companies that fulfill specific criteria can capitalize on Malta's distinctive tax refund system. This system enables qualifying companies to secure a refund of up to 6/7 (85.71%) of the tax paid, resulting in an effective corporate income tax rate as minimal as 5%. This attractive rate serves as a considerable incentive for businesses in search of a tax-friendly jurisdiction.

Incremental Tax:

Malta enforces a standardized VAT rate of 18%. Although cryptocurrency transactions typically enjoy exemption from VAT, certain services provided by cryptocurrency companies, such as electronic wallet services, might be susceptible to VAT. Navigating the intricacies of VAT obligations demands meticulous consideration, and seeking guidance from specialists is recommended to ascertain the relevance of VAT to specific business activities.

Capital Gains Tax is notably absent from Malta's tax framework concerning cryptocurrency transactions. Companies that conduct cryptocurrency transactions as part of their routine business operations or for the management of company assets enjoy an exemption from capital gains tax. This absence of capital gains tax contributes to Malta's attractiveness as a jurisdiction that nurtures transformation in the industry.

Tax Planning and Professional Assistance:

While Malta offers a tax-friendly environment for cryptocurrency companies, the complexity of its tax system necessitates professional advice. Engaging qualified tax consultants or legal experts familiar with Maltese tax regulations is highly recommended. These professionals can provide tailored guidance, ensuring companies navigate the intricacies of Malta's tax landscape effectively.

Conclusion

In conclusion, the process of obtaining a tokenized currency license in Malta involves crucial stages, from the initial application submission to the issuance of the license. However, given the intricate nature of the procedure, it is highly recommended for companies to seek professional guidance or consultation from experts well-versed in the nuances and prerequisites associated with acquiring cryptocurrency licenses in Malta.

Securing a cryptocurrency license in Malta not only grants companies the legal authorization to conduct operations but also opens up a realm of significant opportunities and advantages. Beyond the mere legal sanction, a license allows companies to engage in cryptocurrency activities with confidence, offering their services to clients in a regulated and trustworthy environment. This, in turn, fosters trust and confidence, positioning the licensed company as a reliable intermediary in the dynamic landscape of the cryptocurrency sphere.

In the dynamic landscape of the evolving cryptocurrency industry, it becomes crucial for businesses to seek professional guidance to navigate intricate regulatory frameworks successfully. Engaging with experts well-versed in the nuances of cryptocurrency licensing in Malta is essential for ensuring a seamless and compliant journey. This strategic approach allows companies to capitalize on the myriad benefits and opportunities associated with obtaining a license in this innovative sector.