Malta releases consultation document on Security Token Offerings

The Malta Financial Services Authority (MFSA) has released a new consultation paper on Security Token Offerings (STO), marking its first and crucial step in revising the country’s regulatory guidelines behind capital markets.

The report, which is in line with its Vision 2021, details the security token industry and how to best approach the STO regulation. STO is defined as a security, typically a bond or share, in which its storage and/or transaction execution is intrinsically dependent on or uses distributed ledger technology (blockchain).

As per a release, the proposed STO policy puts into consideration the evolving needs of the capital market while maintaining standards of investor protection and market integrity.

Malta is a highly developed nation that depends on capital markets and investment to sustain its economy. As such, the MFSA has taken a strong interest in security tokens as it aims to build an ecosystem that will lead to greater private sector innovation, investment, and growth.

In 2018, the MFSA released its Fintech Strategy and Virtual Financial Assets Framework. It is now seeking to bridge the gap between traditional securities and tokenized securities with this consultation paper.

“The objective of the Consultation Paper is for Authority to obtain stakeholders’ views on policy which, whist supporting innovation and new technologies for financial services, does not compromise investor protection, financial integrity and financial stability,” the announcement noted.

The paper will look into the various processes of applications and admissibility to listing; obligations following an offer, listing, and/or trading of traditional STOs; secondary markets; market abuse regulation; and post-trade settlement.

The consultation is open for feedback from the public until August 30.

“We have to make sure that our financial sector rules do not inadvertently hinder this type of useful information. And this starts with legal certainty,” Valdis Dombrovskis, Vice President of the European Commission, said during the Eurofi High-level Seminar last April 2019.

The Malta government has always favored blockchain technology as it plans to move forward in the modern world.

Recently, Apple co-founder Steve Wozniak has invested in a new blockchain-based energy efficiency company, called Efforce, that aims to get recognized as the “first and main platform in the world for tokenized energy savings.”