Comprehensive Evaluation of Malta’s Cryptocurrency Licensing Framework
In a recent development that holds significant implications for the European cryptocurrency landscape, the European Securities and Markets Authority (ESMA) has initiated a thorough review of Malta’s approach to cryptocurrency licensing. This scrutiny is aimed at understanding how Malta’s regulatory body, the Malta Financial Services Authority (MFSA), manages the authorization of crypto asset service providers (CASPs) under the EU-wide Markets in Crypto-Assets (MiCA) regulation, which came into force in June 2024.
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Understanding the Concerns about Authorization Standards
The Peer Review Committee (PRC) of ESMA has carried out a focused assessment of the MFSA’s authorization process for an unidentified CASP. The assessment revealed several areas where the MFSA’s procedures did not fully align with expected standards. Although the MFSA boasts sufficient staffing and technical resources, the evaluation indicated that the approval process only “partially met expectations.”
ESMA highlighted that these concerns are not isolated to Malta alone. The organization urged all EU national competent authorities (NCAs) to harmonize their oversight methods, ensuring uniformity across the EU under MiCA’s regulatory framework. The impetus for this peer review was a decision by ESMA’s Board of Supervisors (BoS) in April 2025, following earlier steps in December 2024 when both the BoS and the European Banking Authority advocated for a unified approach to CASP authorizations under MiCA.
Evaluating Malta’s Supervisory Practices
The ESMA report, although centered on Malta, aims to promote regulatory convergence throughout the EU as MiCA implementation progresses. The PRC’s analysis covered three main aspects of Malta’s crypto regulation: the supervisory structure and staffing, authorization processes, and post-licensing supervisory measures.
While the MFSA was commended for its expertise and resources in CASP supervision, the report identified deficiencies in handling significant issues during the authorization phase. ESMA recommended that the MFSA enhance its capabilities to address unresolved or underexplored issues that may arise post-approval.
Advocating for Harmonization Among EU Regulators
The ESMA report underscores the necessity of regulatory uniformity, particularly as new crypto businesses pursue licensing under MiCA. The PRC emphasized that national regulators must swiftly adapt to the increasing number of applications and the evolving risk profiles of CASPs. The committee advised all NCAs to focus on specific aspects of the authorization process due to the unique nature and inherent risks associated with these entities.
Although Malta has traditionally been seen as a crypto-friendly jurisdiction within the EU, the ESMA review highlights the changing expectations for all EU member states. With MiCA striving to eliminate regulatory discrepancies and foster a level playing field, NCAs must synchronize not only their licensing procedures but also their supervisory capabilities and enforcement strategies.
Going forward, regulatory collaboration and transparency are expected to become essential benchmarks for measuring the effectiveness of national cryptocurrency oversight.
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