The Malta Financial Services Authority (MFSA) has been on the forefront when it comes to creating a regulatory framework for blockchain-based businesses. Crypto friendly country published a legislative framework for Security Token Offerings on 19th July. This framework is open to feedback from the industry and people until the end of August. This framework by MFSA deals with STOs and ICOs and what qualifies DLT asset to be able to issue STO.
The proposed paper defines STOs in two categories; traditional STOs and Other STOs. Traditional STOs being transferable securities such as shares, bonds. Other STOs are defined as the technological representation of securities that are somewhat similar to traditional securities. For a company to be able to issue STO, it must fall under one of the two definitions. And it also says that issuing companies must have legal standing.
The STO issuing company will also have to prove the financial soundness of the business by providing all assets, liabilities, profits, and losses. This paper also focuses on the transparency required by the issuing company.
The proposed paper outlines the legality of secondary market
The proposed paper also discusses the secondary markets where the securities are bought and sold. It outlines the legality of wallets and exchange services of both types centralized and decentralized.
Through this consultation paper, MFSA has brought the issue of market abuse. It describes the market abuse by insider trading, unlawful disclosure of inside information, and market manipulation.
MFSA, CEO, Joseph Cuschieri said that Malta is providing a conducive environment for Security Token Offerings for blockchain business. Malta is continuously enhancing its financial market by providing a safer environment for new tech companies.