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Report on Retail_Trading_Status in Malta

Date: 2025-06-26

Topic: Retail_Trading_Status

Description: Assess whether individual citizens and residents in the country are legally permitted to buy, sell, and hold cryptocurrencies. Detail the regulatory environment surrounding this activity (e.g., KYC/AML requirements imposed on platforms, general warnings issued).

Retail_Trading_Status

Identified Status: Allowed-Regulated

Detailed Narrative Explanation:

Individual citizens and residents in Malta are legally permitted to buy, sell, and hold cryptocurrencies. This activity is subject to a comprehensive regulatory framework, primarily shaped by the European Union's Markets in Crypto-Assets Regulation (MiCA) and national legislation that integrates and complements these EU-wide rules. Malta has historically positioned itself as a "Blockchain Island" and was an early adopter of crypto-specific regulations with its Virtual Financial Assets Act (VFAA) in 2018.

The regulatory landscape has recently evolved significantly with the full implementation of MiCA across the EU. MiCA's provisions became applicable in two phases: June 30, 2024, for asset-referenced tokens (ARTs) and e-money tokens (EMTs), and December 30, 2024, for all other crypto-assets and crypto-asset service providers (CASPs). Malta has enacted the Markets in Crypto-Assets Act (Chapter 647 of the Laws of Malta) to implement MiCA into its national law. This act is gradually phasing out the VFA Act, with transitional provisions in place for VFA service providers licensed before December 30, 2024, allowing them to operate under the VFA Act until July 1, 2026, or until they receive CASP authorisation under MiCA. New CASPs are required to undergo a full authorisation process under MiCA.

The Malta Financial Services Authority (MFSA) is the primary regulatory body responsible for overseeing the crypto-asset sector, including the authorisation and supervision of CASPs. The MFSA has issued a MiCA Rulebook and various circulars to provide guidance to CASPs on compliance with MiCA's requirements, including authorisation processes, fit and proper assessments for personnel, and ongoing obligations. These regulations aim to enhance consumer protection, market integrity, and financial stability.

A key aspect of the regulatory framework is the implementation of robust Anti-Money Laundering (AML) and Counter-Financing of Terrorism (CFT) measures. CASPs are subject to KYC/AML requirements, which include customer due diligence, identity verification, and transaction monitoring to prevent illicit financial activities. The Financial Intelligence Analysis Unit (FIAU) in Malta is responsible for overseeing AML/CFT compliance. European regulations, such as those focusing on preventing financial system misuse for money laundering or terrorist financing (often referred to as AMLR), including the "travel rule" for crypto transfers, are also applicable.

In terms of taxation, Malta has specific approaches to cryptocurrency. While long-term holdings of cryptocurrencies considered a store of value may not be subject to capital gains tax for individuals, frequent trading with the intent of making a profit is generally considered a business activity and is subject to income tax. Companies involved in cryptocurrency trading and other related activities are subject to corporate tax, though structuring options may reduce the effective tax rate.

The MFSA actively monitors CASPs to ensure transparency and accuracy in their operations and communications with clients. For instance, the MFSA has required Malta-regulated CASPs to direct EU/EEA clients to dedicated websites with clear disclosures about offerings available in these jurisdictions. The regulatory framework is designed to foster innovation while ensuring a safe and regulated environment for retail crypto trading.

Specific, Relevant Text Excerpts:

• MiCA Implementation: "The 30th December 2024 marked the date when the Markets in Crypto-Assets Regulation (MiCA) came fully into force across the European Union. MiCA establishes a comprehensive regulatory framework for crypto-assets, aiming to enhance consumer protection and market integrity."
• Malta's National Legislation: "The VFA is slowly being phased out following enactment of the Markets in Crypto-Assets Act (Chapter 647, Laws of Malta) in 2024, which complements MiCA and integrates its requirements into Maltese law."
• Role of MFSA: "The Malta Financial Services Authority (MFSA) plays a pivotal role in regulating cryptocurrency and other virtual assets. On April 4, 2025, the MFSA issued a circular to CASPs authorized under MiCA, emphasizing clear and structured supervision. The agency focuses on consumer protection, financial markets integrity, and financial stability in the crypto sector."
• AML/CFT Requirements: "Regulatory authorities are keen to ensure that cryptocurrencies are not used as a vehicle for illicit financial activities, which has led to the implementation of Know Your Customer (KYC) and Anti-Money Laundering (AML) procedures in many cryptocurrency exchanges." "In Malta, the Financial Intelligence Analysis Unit (FIAU) is the national central agency responsible for the collection, collation, processing, analysis and dissemination of information to combat money laundering and the funding of terrorism."
• Taxation of Crypto for Individuals: "Crypto selling: All profits you make as an individual from selling cryptocurrencies aren't taxed and aren't considered to be capital gains. Frequent trading and large sums: In case you're involved with a crypto trading activity often or if you deal with large sums of currency, Malta tax authorities will consider that to be a business activity. Precisely because of that, you may be subject to personal income tax that may range between 15% and 35%."
• Transition from VFAA to MiCA: "As a result of MiCA's coming into force, the Virtual Financial Assets Act (VFAA) is no longer applicable, except in relation to those issuers and service providers that were authorised by the Malta Financial Services Authority (MFSA) before 30 December 2024, and will be fully repealed on 3 July 2026."

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