Malta Proposes Test To Identify When ICOs Are Securities

  • Malta recently set out to create a test that will determine whether assets laucnhed through an ICO should be deemed as securities
  • The test will be a two-stage process and, by the country's report, may see other EU member follow suit.

Malta has recently proposed the creation of tests to determine whether assrts launched through initial coin offerings (ICOs) can be defined as securities.

The island off the coast of Sicily may become the first nation in the European Union (EU) to put forward assessment protocols to measure the credibility of ICOs, while also affording investors a greater level of security through its proposals this week.

In a report published by the Malta Financial Services Authority (MFSA), assessing how tokens should be classified using a multiple stage process would create a better level of security for investors..

The success of Malta's assessment process may, by the reports’ own admission, see other EU members implement it.

"This Consultation Paper presents an analysis of the definitions of the financial instruments listed under Markets in Financial Instruments Directive 2 (‘MiFID’) as well as their relevance and implications to DLT [distributed ledger technology] assets. The methodology underpinning the Test’s determination as well as the considerations which should be taken into account within the context of the EU and national legislative frameworks are also presented."


DLTs within Malta will come under a two-stage examination which will help find the right classification for each, on a case-by-case basis. Specific blockchain technology applications or tokens can be exempt from further regulations. In some cases, they may enter the second stage of examination, where the token or DLT would be assessed against different kinds of securities.

The report reads:

"It is being proposed that the Test will consist of two stages, wherein the first stage would effectively determine whether a particular DLT asset qualifies as a Virtual Token (‘VT’)3. Subject to a negative determination during the first stage, the second stage would determine whether the DLT asset would qualify as a financial instrument under Section C of Annex 1 to MiFID."


Any token or asset that undergoes these stages of testing may be classified under existing Maltese and EU regulations. During the second stage of testing, these tokens can then be placed under more specific securities categories.

Tokens or DLTs that fail the second stage of testing will then be subject to a third line of assessment. Those that come under this line of testing will be placed under the regulatory oversight of the proposed Virtual Financial Assets Act (VFAA).

Japan’s Central Bank Preparing for Reality of Digital Yen

  • Bank of Japan (BoJ) official Masayoshi Amamiya says the central bank is preparing for digital currency if demand increases.
  • BoJ has no plans as of yet to issue a digital currency, but is exploring the technology.

An official for Japan’s central bank said the country needs to be ready in the event that demand for a “digital yen” increases. 

According to a report by Reuters on Thursday, Masayoshi Amamiya told attendees at a Tokyo seminar that advancements in technology could drive further demand for central bank-backed digital currencies. 

Amamiya called it “very important” for the Bank of Japan to explore the technology of digital currencies, despite having no immediate plans to issue a sovereign coin. 

He said, 

The speed of technical innovation is very fast. Depending on how things unfold in the world of settlement systems, public demand for CBDCs could soar in Japan.

He continued, 

We must be prepared to respond if that happens.

Amamiya said it was unlikely for monetary policy affecting interest rates and bank lending to change in the event of digital currencies gaining popularity. However, he said it was “worth looking into” whether central banks could more easily impose negative interest rates with a fully digital system.

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