MFSA Publishes Strategic Plan, Prioritises Crypto Surveillance

The three-year strategic plan covers the 2019-2021 period.

The Malta Financial Services Authority (MFSA) has published its three-year strategic plan for the 2019-2021 period this Friday. The plan highlights the regulators supervising priorities and key areas it aims to address during this period.

It is no surprise that the MFSA is prioritizing cryptocurrency over the next three years, as Malta has become a blockchain and cryptocurrency-friendly jurisdiction over the past few years.

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Among the regulator’s priorities is combatting financial crime, money laundering, and terrorism financing. As part of this, the watchdog stated in its report that it would be actively monitoring and managing business-related risks which relate to licensed virtual assets and cryptocurrency businesses.

“Whilst Malta has taken unprecedented steps in bringing blockchain and crypto technology into the regulatory fold, we understand that such innovations present challenges in the prevention of money laundering and terrorism financing,” the report said.

“Hence, at the MFSA we will be striving to modernise our regulatory approach to be prepared and be a step ahead of industry developments. We will continue to work closely with the FIAU and other national and international authorities, including the newly set-up Malta Digital Innovation Authority (MDIA).”

MFSA to increasingly rely on technology to supervise markets

In order to effectively supervise the financial industry in Malta, the regulator is going to rely increasingly on technology. It also expects that firms within the sector will themselves, take a technology-driven approach to regulatory compliance.

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This includes the implementation of RegTech, which includes automation and artificial intelligence, which the MFSA believes will become widespread in the future. Because of this, the Maltese regulator aims to remain on top of all of the latest RegTech developments.

“To monitor and manage business risks related to licensed virtual assets and cryptocurrency businesses, the MFSA has invested and is in the process of implementing SupTech intelligence tools,” the report highlighted.

“This will better position the MFSA to identify fraud, prevent money laundering and the funding of terrorism and protect consumers, investors and market stakeholders. The implementation of SupTech intelligence tools will provide the MFSA with powerful oversight tools to automate regulatory processes and audit the risk management of virtual asset businesses that are licensed in Malta.”

Enforcing binary options and CFD regulations remain priority

In addition to continuing to monitor and support the cryptocurrency industry in Malta, the MFSA will also be keeping a close eye on firms to ensure they are meeting their obligations for MiFID II.

“Through our supervisory arm we aim to monitor, detect and manage misconduct by firms in a timely manner and mitigate the detrimental effects of any abuse on the financial markets, stepping up our enforcement action against misconduct by supervised firms.”

As part of this, the authority will also be implementing the National Product Intervention Measures taken during 2019. This refers to the restrictions of contracts for differences (CFDs) and binary options.

The watchdog is also in the process of transposing, into the Conduct of Business Rulebook, the current policy for firms that distribute, or intend to distribute, CFDs and/or rolling spot foreign exchange (forex) contracts under the MiFID regime.

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