MFSA’s Dr Christopher P. Buttigieg and Dr Gerd Sapiano publish a research paper titled: ‘A critical examination of the VFA framework – the VFA agent and beyond’.

In a world where the mitigation of reputational risk and the enhancement of investor protection are of the essence, VFA agents are playing a critical role within Malta’s crypto-assets framework. These ensure that only operators who are deemed fit and proper are given access to the financial system.

VFA agents act as a first line of defence against abuse within the financial system, assessing operators and acting as gatekeepers at authorisation stage. While VFA agents’ checks do not replace those of the MFSA, having a VFA agent already assessing an applicant inevitably makes the process more efficient, with a certain degree of reliance being placed on such Agents.

The VFA agents’ role was one of the main subjects of discussion in a research paper by Dr Christopher P. Buttigieg and Dr Gerd Sapiano, titled ‘A critical examination of the VFA framework – the VFA agent and beyond’. The paper, which was published in July in the journal Law and Financial Markets Review, outlines how the MFSA is ensuring that registered agents can act as the Authority’s extended supervisory arm, bolstering the monitoring regime in this area. The paper also enters into the VFA Agents’ role with respect to issuers, which is similar to that carried out by a compliance officer appointed by a service provider. The paper, moreover, analyses the Maltese crypto-assets regulation framework and compares Malta’s approach to developments in other jurisdictions, with special attention to the French system.

France, the paper’s authors highlight, is the only EU member state other than Malta to have a sui generis framework for the sector, with both countries’ systems having the same aim of regulating the offering of crypto-assets which fall outside of the scope of European legislation. They go on to underline, however, that there are two important distinctions between the two countries’ frameworks. The first lies in the way access to banking services, particularly the opening of accounts for crypto-assets issuers, is dealt with, while the second is the fact that Malta’s framework also covers the technology aspect of the sector, through the Malta Digital Innovation Authority Act and the Innovative Arrangements and Services Act.

Interested in exploring the topic in greater depth? Read the full paper here.