Security Token Offering ('STO')

Malta has established itself as an EU financial services centre with a clear and business-friendly legislative framework covering the issue, trade and provision of services to all financial instruments. Notably, Malta was one of the first jurisdictions to introduce comprehensive legislation for the regulation of innovative financial services, preceding later EU legislation on the subject. The Malta Stock Exchange permits the listing of bonds and equities in line with EU regulations and has served as the launch pad for numerous international companies.

In tandem with the growth of financial services, Malta has been a prime fintech hub for over a decade by attracting to the island several electronic money institutions and payment service providers, as well as having developed into the world’s largest iGaming hub.

This led Malta to invest heavily in its IT infrastructure and has attracted a large proportion of senior IT talent to the island. This experience both as an international financial service centre as well as regulating tech-based, high-risk industries positioned Malta perfectly to capitalise on the rise of DLT technology.

Malta has sought to create a regulated framework for innovative technology covering DLTs, ICOs and relative services providers that continues to build on the three pillars of consumer protection, market integrity and financial stability, whilst ensuring that tokenized financial instruments are recognised as such and continue to be regulated by Maltese and EU financial services and crypto law.

• Rules and Documentation in English
• ‍Consumer Protection, Market Integrity and Financial Stabilit
• ‍Regulator’s Open-Door Policy
• ‍Reputable, Cost-Effective Jurisdiction
• ‍Attractive Passporting Corporate Tax Regime

The comprehensive legal framework issued by Malta, based on EU legislation to regulate crypto-assets and financial instruments comprises a series of three laws:

• the Malta Digital Innovation Authority Act (MDIA Act) establishing the Malta Digital Innovation Authority (MDIA);
• the Financial Markets Act (FMA) and Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments (MiFID) providing for the authorisation of regulated markets, central securities depositories and for the orderly trading in transferable securities;
• the Markets in Crypto-Assets Act implementing Regulation (EU) 2023/1114 of the European Parliament and of the Council of 31 May 2023 on markets in crypto-assets (MiCA) mainly regulating initial coin offerings (ICOs), admission to trading on a trading platform of asset-referenced tokens (ARTs), e-money tokens (EMTs), other crypto-assets, and crypto-asset service providers (CASPs).

That said, tokens that represent any financial instrument, despite running on distributed ledger technology (DLT), generally will fall outside the scope of MiCA and will instead be regulated by the prevailing EU law and national legislation under the FMA and MiFID, depending upon the exact nature of the financial instrument. Whilst financial instruments are generally outside the scope of MiCA and fall under MiFID and the FMA, the prior determination of a DLT asset as a financial instrument, however, is to be undertaken in line with MiFID, MiCA and the European Securities and Markets Authority’s (ESMA) guidelines.

Tokens linked specifically to securities and in relation to which a public offering is going to be undertaken are generally regulated by the Malta Companies Act which deals with public offerings in terms of Maltese law and sets out rules relating to capital issues by public companies.

Should issuers want to list and trade their securities, on the other hand, the Malta Financial Markets Act sets out the framework for the regulation of financial markets, creating the Listing Authority which in turn is empowered to issue listing rules regulating any admittance to trading on the Maltese regulated markets.

Our team provides precise regulatory guidance,ensuring your token offering is assessed and structured in accordance withMiFID or MiCA. We offer end-to-end support throughout the regulatory lifecycle,including assistance with obtaining MFSA licensing, support with other nationaland EU authorities, and advising on EU passporting rights. To optimize yourbusiness structure, we deliver integrated tax and corporate advisory services,enabling you to achieve operational efficiency and compliance.