The Role of the VFA Agent (Malta).


A thor­ough read­ing of the pro­posed Vir­tu­al Finan­cial Assets Act, 2018 high­lights the neces­si­ty to have a sys­tem of checks and bal­ances ensur­ing that who­ev­er is advis­ing clients in the realm of tokens and cryp­tocur­ren­cies is essen­tial­ly com­pe­tent, qual­i­fied and dili­gent.

This is cer­tain­ly one of the main rea­sons why the leg­is­la­tor felt the need to intro­duce a VFA (Vir­tu­al Finan­cial Assets) Agent to pri­mar­i­ly act as an ‘inter­me­di­ary’ between the prospec­tive clients and the ‘Com­pe­tent Author­i­ty’ (in this case being the Mal­ta Finan­cial Ser­vices Author­i­ty).

Whilst the ‘bur­den’ of what is being sub­mit­ted will ulti­mate­ly always be the respon­si­bil­i­ty of the appli­cant, it is up to the VFA Agent to pro­vide detailed guid­ance and advice. In this con­nec­tion, this arti­cle will seek to briefly delve into the role of the pro­posed VFA Agent and why rep­re­sen­ta­tives of Dr. Wern­er & Part­ner will be your ide­al choice for set­ting up Ini­tial Coin Offer­ings (ICOs) and plac­ing tokens on an DLT Exchange.

The ‘Nature’ of the VFA Agent.

As a pre­lim­i­nary obser­va­tion, it is to be not­ed that the ‘nature’ of the VFA Agent is restrict­ed to a lim­it­ed group of peo­ple. In fact, the Act men­tions that an Agent means ‘a per­son reg­is­tered with the Com­pe­tent Author­i­ty under this Act and autho­rised to car­ry on the pro­fes­sion of:

  • Advo­cate, Accoun­tant or audi­tor; or
  • A firm of advo­cates, accoun­tants or audi­tors, or cor­po­rate ser­vice providers; or
  • A legal organ­i­sa­tion which is whol­ly owned and con­trolled by per­sons referred to in para­graphs (a) or (b).

Nev­er­the­less, the last part of the def­i­n­i­tion how­ev­er men­tions ‘any oth­er class of per­sons’ which seems to entail and afford a degree of flex­i­bil­i­ty. To what extent can oth­er ‘per­sons’ be deemed to hold the nec­es­sary expe­ri­ence and qual­i­fi­ca­tions is yet to be seen/ascertained.

What’s expected from a VFA Agent.

The VFA Agent must be a ‘fit and prop­er’ per­son and must be res­i­dent in Mal­ta. If the Agent will be a cor­po­ra­tion, it must be either a Mal­tese com­pa­ny or if it is a non-Mal­tese com­pa­ny, must oper­ate through a branch here in Mal­ta.

Arti­cle 7(1) of the pro­posed Act states that: ‘An issuer is required to appoint, and have at all times in place, a VFA agent who shall be reg­is­tered with the Com­pe­tent Author­i­ty’. The Agent is expect­ed to have a vari­ety of oblig­a­tions includ­ing: the sub­mis­sion of all rel­e­vant doc­u­ments and infor­ma­tion to the MFSA (Art. 7(1)(d), dis­close all nec­es­sary infor­ma­tion to the Author­i­ty accord­ing­ly (Art.7(1)(e) and essen­tial­ly be Inde­pen­dent of the issuer (Art. 7(1)(f) — essen­tial­ly mean­ing that the VFA Agent should not be an Employ­ee of the Issuer). In this con­nec­tion, the Agent’s abil­i­ty to issue inde­pen­dent pro­fes­sion­al state­ments should nev­er be com­pro­mised.

The VFA Agent will be expect­ed to review all work and appli­ca­tions on a year-to-year basis whilst also ensur­ing the sub­mis­sion of the Com­pli­ance Report [although this will be pre­pared by the Admin­is­tra­tors of the DLT Plat­form].

The Financial Instruments’ Test

From a prac­ti­cal point of view, the main respon­si­bil­i­ty of the VFA Agent will be to car­ry out the Finan­cial Instru­ments Test and ascer­tain whether the Asset being dealt with is pri­mar­i­ly a finan­cial instru­ment or elec­tron­ic mon­ey. The ‘Test’ emanates from Arti­cle 47 of the Act, which cat­e­gor­i­cal­ly states that: ‘The Com­pe­tent Author­i­ty’ shall intro­duce a test applic­a­ble to issuers, VFA Agents and License hold­ers for the pur­pos­es of deter­min­ing whether a DLT asset qual­i­fies as elec­tron­ic mon­ey, a finan­cial instru­ment, vir­tu­al finan­cial asset or vir­tu­al token:

Pro­vid­ed that such test shall be applic­a­ble pri­or to the sub­mis­sion of the whitepa­per to the com­pe­tent author­i­ty or the pro­vi­sion of a VFA ser­vice, as the case may be’.

How the VFA Agent can offer ‘certainty’.

It goes with­out say­ing that this test aims to pro­vide a solu­tion to the uncer­tain­ty which cur­rent­ly per­me­ates the dig­i­tal-world. By being both avant-garde and ‘adven­tur­ous’, Mal­ta is essen­tial­ly intro­duc­ing a ‘for­mu­la’ which will deter­mine whether the Vir­tu­al Finan­cial Asset:

  1. Could poten­tial­ly be clas­si­fied a ‘secu­ri­ty’ gov­erned local/EU Reg­u­la­tions per­tain­ing to Invest­ment Ser­vices (e.g. Mifid Guide­lines);
  2. Is in some ways a ‘hybrid’ and there­fore has the ele­ment of an ‘invest­ment’ or ‘mon­ey’; or
  3. Is nei­ther of the above.

In this con­text, once the VFA Agent decides what the ICO will be doing, he/she will need to deal with the applic­a­ble law which will hence­forth gov­ern the issuance of such token/s. Anoth­er main oblig­a­tion the VFA Agent is required to do is assist­ing the issuer of the ‘Whitepa­per’ to com­ply with the law and make sure all require­ments are adhered to.

Con­sid­er­ing the above, the VFA Agent will pri­mar­i­ly be deal­ing with two ‘major’ areas and that is (i) the set­ting up and issuance of an Ini­tial Coin Offer­ing (ICO) and (ii) the plac­ing of a Token on a DLT Exchange.

The VFA Agent vis-a-vis the MFSA

It is cer­tain that the MFSA will use the VFA Agent as the port-of-call and he/she will need to keep all infor­ma­tion avail­able because there will cer­tain­ly be inspec­tions con­duct­ed by dif­fer­ent reg­u­la­tors. It is inad­ver­tent­ly also up to the VFA Agent to ensure that thor­ough Due Dili­gence is con­duct­ed on every new ‘project’. The Agent can­not just sim­ply ‘col­lect’ due dili­gence but gath­er all rel­e­vant infor­ma­tion and apply an open-mind in terms of the Issuer’s Busi­ness Plan being pro­posed and pre­sent­ed to the MFSA.  More­over, the MFSA has the pow­er to issue direc­tives on an ad hoc basis ensur­ing Agents are sub­ject to reg­u­la­to­ry pow­ers.

The VFA Agent will cer­tain­ly be sub­ject to the PMLFTR [The Pre­ven­tion of Mon­ey Laun­der­ing and Fund­ing of Ter­ror­ism Reg­u­la­tions] as this goes hand in hand with the Agent being grant­ed a License issued by the MFSA (and just like any oth­er oper­a­tor, the Author­i­ty will have the pow­er to can­cel, sus­pend or refuse it accord­ing­ly). With­in this con­text, it is safe to say that VFA Agents will be reg­u­lat­ed class­es of per­sons.

Transitory Provisions applicable to the VFA Agent.

Arti­cle 62 deals with the tran­si­to­ry pro­vi­sions applic­a­ble to VFA Agents and in this con­nec­tion, a brief appre­ci­a­tion of what is being pro­posed is also worth analysing.

For the time being, prospec­tive ‘Agents’ can do with­out a license [that is, until the law comes into effect]. When the Bill does become ‘law’ [it is expect­ed that the laws will come into force in Octo­ber], per­sons will­ing to act as VFA Agents will have one month to apply for a license at the MFSA. What is impor­tant to keep in mind, is that it is essen­tial that the ‘phys­i­cal’ appli­ca­tion itself is hand­ed in with­in one month accord­ing­ly.


Essen­tial­ly, the role of the VFA Agent is there to expe­dite pro­ceed­ings when apply­ing for an ICO Project or the plac­ing of a token on an exchange as ‘expert guid­ance’ can be pro­vid­ed to entre­pre­neurs pri­or to liais­ing with the ‘Com­pe­tent Author­i­ty’. Whilst this might cer­tain­ly be a huge ben­e­fit to the indus­try, it does entail that the VFA Agent needs to always be sat­is­fied with the indi­vid­u­als, organ­i­sa­tion­al ele­ments of the issuer/product and ulti­mate­ly ful­ly cog­nisant of the Busi­ness plan being tabled. It is ulti­mate­ly also the VFA Agent’s duty to liaise with the MFSA accord­ing­ly.

Final­ly, the ‘pur­pose’ of all this reg­u­la­tion is to pro­tect the Pub­lic Inter­est since this ‘per­son’ will cer­tain­ly be act­ing as a ‘gate­keep­er’ for appli­ca­tions before going to the MFSA. This ‘aspect’ will cer­tain­ly be a very impor­tant fea­ture for efficiency’s sake.

Here at Dr. Wern­er & Part­ner, our qual­i­fied per­son­nel will be more than will­ing to act as your per­son­al VFA Agents and help you draw up your busi­ness plans/proposals as per local leg­is­la­tion. You can con­tact us accord­ing­ly to dis­cuss any ICO, Token Gen­er­a­tion Event or Blockchain-relat­ed idea by send­ing an email to:


The above-men­tioned arti­cle is sim­ply based on inde­pen­dent research car­ried out by Dr. Wern­er and Part­ner and can­not con­sti­tute any form of legal advice. If you would like to meet with up with any of our rep­re­sen­ta­tives to seek fur­ther infor­ma­tion, please con­tact us for an appoint­ment.


About Dr. Michael Calleja

Dr. Michael Calle­ja, born on the 07.01.1988, stud­ied law at the Uni­ver­si­ty of Mal­ta from 2006 till 2012. He grad­u­at­ed Bach­e­lor of Laws & Euro­pean Stud­ies in 2009 with a Sec­ond Class Upper Degree and grad­u­at­ed Notary Pub­lic in 2010. He suc­cess­ful­ly defend­ed his the­sis enti­tled: ‘Beyond the Bosman Rul­ing: Con­trac­tu­al Dis­putes in Foot­ball and the Spe­cif­ic Nature of Sport in the Euro­pean Union’ in 2012 and obtained his Doc­tor of Laws (LL.D) accord­ing­ly.

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