MALTA Law and Practice Contributed by: Ian Gauci and Cherise Abela Grech, GTG Legal
2.4 Variations Between the Regulation of Fintech and Legacy Players The VFAA provided new and legacy players with specific requirements and limitations when con - ducting business in this sector, and this has now been furthered through the implementation of MiCA. However, no distinction is made accord - ing to whether a player in this sphere is a new The MFSA’s Fintech Regulatory Sandbox allows fintech operators to test their own innovations within a regulatory environment for a specified period of time and under certain prescribed con - ditions. The sandbox is open to fintech service providers and fintech suppliers, accepting start- ups, technology firms and established financial service providers that approve of technologically enabled innovation in their business models, applications or products. entrant or a legacy player. 2.5 Regulatory Sandbox The regulatory sandbox is intended to target technologically enabled financial innovation that could result in new business models, applica - tions, processes or products with an associated material effect on financial markets and the pro - vision of financial services. Since its launch, the sandbox has seen increased interest, with numerous proposals received with diverse innovative technologies for financial ser - vices, covering a range of investment service products, market infrastructures and regtech solutions. The ITA Sandbox The Malta Digital Innovation Authority (MDIA) also has its own Technology Assurance Sand - box (MDIA-TAS) to complement its innovative technology arrangement (ITA) full certification framework. Its aim is to be a key utility for start-
ups and smaller companies developing solutions based on innovative technologies, by providing a safe environment to develop their technologi - cal solutions. The MDIA-TAS aims to ensure that regulatory certainty can be given to ITAs developed by small entities and that a balance is reached between maintaining full certification and the adopted high-barrier entry approach, while address - ing financial and technical barriers for smaller entities. The sandbox framework is intended to guide applicants in the proper development of their solution within the lines of recognised inter - national guidelines and standards, and other regulatory and legal obligations. Applicants are guided for a maximum period of two years, with the end result of being in a position to obtain full MDIA certification. To participate in the MDIA-TAS, applicants must prove to the authority that their ITA has a reason - able element of substance relevant to Malta, by proving either that the development of the ITA will be carried out in Malta or that its operations The MFSA is the primary regulator for entities issuing crypto-assets, EMTs and ARTs in terms of MiCA, and also for CASPs. It is also the regu - lator responsible for financial institutions. The Financial Intelligence Analysis Unit (FIAU) CASPs are deemed to be “subject persons” in terms of Malta’s anti-money laundering and combatting the funding of terrorism (AML/CFT) legislative and regulatory framework. This factor therefore brings CASPs into the purview of the FIAU, which is the government agency tasked with the collection, collation, processing, analy - will be carried out in or from Malta. 2.6 Jurisdiction of Regulators The MFSA
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