Malta Announces New Cryptocurrency Guidelines

Cryptocurrencies

Only cryptocurrencies which satisfy the following criteria may be accepted:

Financial Value

1. The technology represented by the cryptocurrency has to provide value for the network participants, address a market requirement which is yet to be met and/or help solve a problem;
2. The underlying network is to be public, trustless and decentralised;
3. The financial system is available to everyone without being controlled by a single entity;and
4. It is easy for members to participate in the economy, having control of their wealth and thefreedom to invest in it as they choose.

Technological Value

1. The technology is open source, well documented and well tested by entities separate from the core development team;
2. There is a working product either on a test network or a main network; and
3. The technology is secure with prompt responses to discoveries of vulnerability andperformance issues.

Scalability

1. The technology behind the cryptocurrency has a clear roadmap for development and project milestones;
2. There are practical applications either in the present or in the future for the technology; and
3. The cryptocurrency is operating on its separate blockchain or is utilising an existing blockchain for practical purposes.

Market Conditions

1. The cryptocurrency has a competitive market capitalisation in comparison with the general market capitalisation that is allocated to other digital assets;
2. There is a trading pair between the cryptocurrency and fiat currencies; and
3. The cryptocurrency is available to trade on asset exchanges and not restricted to onegeographic region.

Economics

1. The cryptocurrency must be necessary in order for the platform to operate. Cryptocurrencies that are classified as physical assets are not eligible for consideration;
2. There is a fundamental reason to purchase and hold the cryptocurrency based on its futureplan and vision regarding growth and milestones. Simple fundraising is not a valid enough

   purpose;

3. There are ways to incentivise miners, validators and other participants on the network towork in a fair manner while penalising malicious behaviour, where this is applicable.
4. There are strict security protocols limiting scams, hacks and theft of funds.
5. The team behind the cryptocurrency should allow a fair distribution of it (limiting the riskof a small number of investors acquiring a majority supply of the cryptocurrency);
6. The team behind the cryptocurrency should be available to respond to feedback andquestions about the technological product and the cryptocurrency; and
7. The business plan and the technology’s website should have an ethical and professionalcode of conduct.

For the sake of clarity, it shall remain at the MGA’s discretion to evaluate whether the above criteria, or any one of them, are satisfied by a particular cryptocurrency. Such evaluation criteria may be revised on an ongoing basis and will adopt a risk-based approach.

Tokens

With respect to custom tokens created by licensees or applicants, the MGA shall assess whether to accept or reject the use of such tokens on a case-by-case basis and be guided by an evaluation of the following:

•   technology;
•   company structure;
•   market applications;
•   security; and
•   human resources.For the sake of clarity, the MGA also reserves the right, in its sole discretion and applying a risk-based approach, to revise its approval or otherwise of custom tokens from time to time. The creation, and acceptance by the MGA for the purpose of this sandbox, of custom tokens is without prejudice to any other regulatory requirements that may be required by other respective authorities.

Characteristics of wallets

The characteristics of wallets storing VCs for gaming will resemble any other VC wallet. This is because a wallet has a limited set of basic operations and properties, as listed below:

1. A wallet has an address.
2. Funds of the specific cryptocurrency can be sent to the wallet’s address.
3. Funds of the same currency can be withdrawn from the wallet as long as there is a sufficientbalance to allow it.

Wallets may be self-hosted by the player, or held with a custodian wallet provider, which may also be an exchange. In all cases, only wallets whose address is specifically tied to the individual player shall be admissible for use in the gaming ecosystem.

Please download the pdf below.