The Malta Financial Services Authority (the “MFSA”), Malta’s single regulator for the financial services industry, has published a consultation document through which it has formally kick-started the process for the regulation of collective investment schemes having as their investment objective the investment in virtual currencies.
The launch of the consultation document foreshadows the regulatory approach to be adopted by the MFSA in relation to this specific faction of the digital economy, and, simultaneously, offers market participants the potential to design a platform tailor made for certain categories of investors willing to invest in virtual currencies.
In terms of the draft rulebook issued as part of the consultation document, such schemes will initially be required to be structured under the laws of Malta either as an open-ended investment company with variable share capital (commonly referred to as the SICAV) or alternatively as a closed-ended investment company with fixed share capital (commonly referred to as the INVCO), albeit the former structure is typically the legal vehicle of choice for promoters desirous of setting up a fund structure within the jurisdiction.
Another notable element emerging from the consultation document is the MFSA’s stance to initially solely allow collective investment schemes constituted as Professional Investor Funds to have the investment in virtual currencies as their investment objective, however concomitantly the MFSA has announced that it is currently in the process of considering the possibility of extending this to Alternative Investment Funds and Notified Alternative Investment Funds.
Following the launch of the consultation process the MFSA has also referred the industry to the statements issued by the European Securities and Markets Authority on the risks posed by Initial Coin Offerings to investors and investment firms.