Malta is Looking to Eliminate Non-Fungible Tokens (NFTs) from Its Crypto Law

The Malta Financial Services Authority (MFSA), the single regulator of financial services in Malta, is planning to remove non-fungible tokens (NFTs) from its Virtual Financial Asset (VFA) framework.

According to the MFSA consultation paper, the regulator is considering removing NFTs from its crypto law as they are all unique, non-fungible and not used to pay for goods and services.

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The authority considers that it would be prudent that certain VFAs, which display clear characteristics of uniqueness and non-fungibility, also be excluded from the VFA framework.

Under the current Virtual Financial Asset Act, NFTs are included among other categories, such as electronic money, virtual tokens, virtual financial assets and all financial tools built on distributed ledger technology.

In the consultation paper, MFSA stated:

The inclusion of such assets within the scope of the VFA framework may run counter to the spirit of the Act, which sought to regulate investment-type services offered in relation to VFAs falling outside the scope of existing traditional financial service asset categories.

The Virtual Financial Asset Act, launched in 2018, requires service providers to publish investor's white papers and be authorized by regulators before issuing any digital token.

MFSA invites interested parties to share their insights until January 6th.

These requirements go far beyond the EU's Markets in Crypto Assets Regulation (MiCA) bill. Under MiCA, NFT service providers will not need to be registered as long as there is valuable evidence that their assets are non-fungible tokens (NFTs).

MiCA bill is expected to be launched across the countries in the European Union in 2024.

After the FTX’s collapse,  the members of the European Parliament urged the EU Commission to pass the MiCA regulation as soon as possible. Moreover, MiCA Rapporteur Stefan Berger wants MiCA to be applied outside the borders of the European Union, adding that “a global MiCA would be the best solution” for a safe crypto industry.