ESMA pointed out the limitations in the licensing process for cryptocurrency service providers in Malta, suggesting improvements in oversight according to MiCA regulations.
The ESMA peer review report focused on how the MFSA handled the licensing application for a CASP, noting many procedural shortcomings and the examination of governance and technology risks before licensing.
MAIN CONTENT
ESMA discovered multiple vulnerabilities in the MFSA's licensing process for CASPs in Malta.
The report praised the MFSA for its oversight but suggested tightening the approval process before licensing.
The MFSA issued regulations on information transparency for cryptocurrency companies according to MiCA standards.
What issues did ESMA criticize in CASP licensing in Malta?
ESMA stated that Malta only partially met expectations in the licensing process for a CASP, leaving many significant issues unresolved before licensing.
The ESMA Peer Review Committee found that the MFSA issued licenses while unresolved issues from previous sanctions remained, alongside shortcomings in risk supervision regarding governance structure, conflicts of interest, custody technology, and AML/CFT. The official report in July 2025 stated that the MFSA had not thoroughly examined factors such as the expansion development model and the new customer list of the provider.
The licensing process is not strict enough as it allows many risks to exceed the scope of post-licensing supervision from the outset.
ESMA, Peer Review Report, July 2025
Why did ESMA implement a coordinated assessment of CASP supervision?
In December 2024, the ESMA Supervisory Board agreed on a common coordinated approach to overseeing CASP licensing under MiCA to increase consistency and efficiency among national regulatory authorities.
The inspection of the MFSA is a case study, with the evaluation starting in April 2025 to comprehensively examine the licensing and preliminary supervision process. Although many shortcomings were identified, the PRC appreciates the resource focus and capability of the MFSA in the cryptocurrency sector.
Regulatory authorities need to be flexible and vigilant regarding the increasing number of licensing applications, ensuring oversight aligns with the market's growth rate.
ESMA Peer Review Committee, announcing the report, July 2025
The PRC recommends that the MFSA apply a stricter inspection process in the pre-licensing phase, rather than pushing major issues to post-licensing supervision.
What adjustments has the MFSA made after ESMA's assessment?
In May 2025, the MFSA issued a new directive requiring all CASPs operating in the EU and EEA to publish specific regional information on dedicated websites to ensure transparency and compliance with MiCA law.
Sarah Pulis, Head of Supervision at the MFSA, emphasized the need for clear, accessible information about products and services to regulators, while publicly disclosing services that are not available in each region. Christopher Buttigieg, Director of Supervision at the MFSA, stated that proactively reviewing the information page helps reinforce accountability in communication, protecting user rights.
Criteria Before ESMA Evaluation After MFSA Adjustments Licensing Process Strict not fully comprehensive, missing many check factors Tightened, enhanced due diligence in the pre-licensing stage Post-licensing Supervision Not optimized, many risks unresolved before licensing Timely response, aligned with risk and market practices Information Transparency Requirements not synchronized, not detailed by region Clear directive applied with dedicated website by region
Frequently Asked Questions?
What is ESMA and what is its role in cryptocurrency? ESMA is the European agency overseeing financial markets, ensuring transparency, stability, and investor protection in the cryptocurrency and digital asset sectors. What mistakes did the MFSA make in licensing CASPs? The MFSA issued licenses while unresolved issues remained, such as previous sanctions and inadequate checks regarding conflicts of interest, governance, and technological risks. How does MiCA affect cryptocurrency companies in Malta? MiCA is a crucial legal framework that forces CASPs to ensure information transparency, comply with governance and security standards, enhancing trust in the European market. What has the MFSA done to improve after ESMA's report? The MFSA tightened the pre-licensing process, increased information transparency on its website, and applied more flexible, proactive oversight post-licensing. How does coordinated supervision benefit the cryptocurrency market? Coordinated supervision creates consistency and efficiency in licensing, manages cross-border risks, and strengthens investor and cryptocurrency business trust.
Source: https://tintucbitcoin.com/mica-malta-bi-eu-canh-bao-giay-phep/
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