MALTA Law and Practice Contributed by: Ian Gauci and Cherise Abela Grech, GTG Legal
Critical Entities Resilience Directive The Critical Entities Resilience Directive on the other hand is an EU-wide framework designed to enhance the resilience of critical infrastructure against physical and cyber threats. It replaces the European Critical Infrastructure Directive (2008) and expands the scope to cover more sectors and risks. It entered into force in January 2023, and member states will have to identify the critical entities for the sectors set out in the Directive by 17 July 2026. EU AI Act The AI Act aims to foster responsible artificial intelligence development and deployment in the EU by introducing a uniform framework across all EU countries, based on a forward-looking definition of AI and a risk-based approach. It provides developers and deployers with clear requirements and obligations regarding specific uses of AI while reducing administrative and financial burdens for businesses. It entered into force on 1 August 2024, and most of its provi - sions will apply after a two-year implementation period. 2. Fintech Business Models and Regulation in General 2.1 Predominant Business Models The current prominent business models in the DLT sphere in Malta are: • crypto-asset service providers (CASPs) or financial service providers that deal in crypto- assets qualifying as financial instruments in terms of MiFID; • crypto-asset issuers; • security token offerings; and • investment funds set up to invest in crypto- assets.
With the full implementation of MiCA, the pres - ence of these players is expected to continue to increase. Malta is also an attractive jurisdiction for finan - cial institutions, most notably electronic money institutions (EMIs), having been one of the first EU jurisdictions to launch a specific regulatory As of 30 December 2024, the issuance of crypto- assets and the provision of crypto-asset services in the EU is regulated by MiCA, which also regu - lates the issuance of electronic money tokens (EMTs) and asset-referenced tokens (ARTs). On the other hand, payment services providers (PSPs) and EMIs are regulated under the Mal - tese Financial Institutions Act, which transposed the provisions of the Payment Services Directive and the Electronic Money Directive into Maltese law. 2.3 Compensation Models Maltese law contains no disclosure requirements regarding compensation models that industry participants use to charge customers. Howev - er, service providers must ensure that their fee structure is transparent, fair and non-discrimi - natory, and that there are no incentives in place that could contribute to disorderly trading condi - tions or market abuse. While MiCA does not prescribe specific com - pensation models, its regulatory provisions necessitate that CASPs design their compensa - tion structures in a manner that ensures compli - ance with conduct, governance and prudential requirements. regime for standalone EMIs. 2.2 Regulatory Regime
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