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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.


Dieser Beitrag basiert auf der Recherche der Kanzlei Dr. Werner & Partner. Bei der Veröffentlichung des Beitrags hat die Werbeagentur Schwarzwaldbruder aus Waldshut-Tiengen unterstützend mitgewirkt.

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Author of the post

Dr. Michael Calleja

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