The policy was due to come into force on 31 December 2022. However, due to overwhelmingly positive feedback on the proposed framework, the MGA decided to extend the invitation for further applications to 28 February 2023.
First Phase of Sandbox Framework for Accepting Cryptos
Both new and existing operators applied for approval to use DLT Assets through the designated section — New or Change in Payment Methods / Financial Management Information. The licensees were mandated to report any failed transactions, invalid deposits, and VFA player liabilities through their monthly reports on player funds.
The implementation of cryptocurrency payments was conditional on the applicant’s existing MGA license and complete acceptance of all financial rules and restrictions imposed by law.
Over the next two years, the MGA published several amendments to the Sandbox Framework, such as changing the criteria for VFAs and clarifying how operators can be granted approval to participate in the Sandbox Framework.
Second Phase of Sandbox Framework Implementation
Before an operator could use an ITA, its core technical equipment had to be accredited by the Malta Digital Innovation Authority (MDIA), compliant with the Innovative Technology Arrangements and Services Act (Chapter 592 of the Laws of Malta).
Before approving a DLT Asset, the MGA had to perform a Financial Instrument Test (FIT) to ensure all provisions of the law were satisfied. The regulator also noted that it would consider only games or components hosted partially or entirely in a DLT environment. Also, all player funds and wagers would be held in escrow until the minimum requirements for a transaction were satisfied.
Future of Virtual Assets in the Maltese Jurisdiction
The regulator’s plans to be at the forefront of change in the industry will pay dividends in the future, especially now that the European Parliament has reached a provisional agreement on regulating crypto-assets at the EU level under the Markets in Crypto Assets (MiCA) proposal. MiCA aims to ensure that digital assets fall under the scope of current financial regulations, thus paving the way for the gaming sector to offer crypto payments.
The MGA Sandbox Framework is nearly identical to MiCA, so complete alignment can be expected with only a few minor adjustments.
