The European Securities and Markets Authority (ESMA) has issued a formal critique of Malta’s approach to granting licenses under the Markets in Crypto-Assets (MiCA) regulation. Following a peer review, ESMA concluded that Malta’s Financial Services Authority (MFSA) “partially met expectations” in its authorization process for certain crypto asset service providers (CASPs). The review identified several areas of concern, including insufficient risk assessment and inadequate consideration of unresolved issues during the licensing process.
ESMA emphasized the need for a more rigorous and thorough approach to licensing, urging the MFSA to enhance its scrutiny of business plans, governance structures, and anti-money laundering measures. The regulator expressed concern that Malta’s expedited licensing procedures could undermine the consistency and effectiveness of MiCA across the European Union, potentially leading to regulatory arbitrage. In response, the MFSA has acknowledged the findings and committed to implementing improvements to align its practices with ESMA’s recommendations.
