MFSA outlines key expectations for Crypto-Asset Service Providers under MiCA

The Malta Financial Services Authority (MFSA) recently held a workshop for Crypto-Asset Service Providers (CASPs), detailing its expectations under the Markets in Crypto-Assets Regulation (MiCA).

The session, held shortly after the issuance of Malta’s first MiCA licences, was aimed at licensed and prospective CASPs, as well as legal and compliance professionals.

Presentations were delivered by MFSA officials Sarah Pulis (Head of Conduct Supervision), Pauline Tonna (Deputy Head), and Antonio Battaglino (Assistant Manager). The workshop focused on market conduct obligations, compliance requirements, and supervisory insights intended to help entities align with the new EU regulatory framework.

Key supervisory expectations discussed included:

• Conflict of interest management: CASPs must go beyond identifying and disclosing conflicts of interest. They are expected to implement practical measures to prevent and manage such conflicts effectively.
• Client best interest and best execution: CASPs are required to prioritise client interests during trade execution. The MFSA stressed that best execution involves a broader assessment – covering price, cost, speed, execution likelihood, and settlement reliability – not just securing the best price.
• Marketing and communication standards: All marketing content must be fair, clear, and not misleading. CASPs must ensure transparency around promotions and incentives, which should be relevant, proportionate, and not of high monetary value.
• Compliance function: The regulator highlighted the need for a permanent, effective, and independent compliance function within CASPs as essential to good governance.
• Website disclosures: The MFSA advised that regulatory and risk disclosures should be clearly visible in the footers of CASP websites. Reference was also made to findings from a recent thematic review of CASP websites, communicated in a “Dear CEO” letter.

Additional topics addressed included reverse solicitation, advisory and portfolio management services, transfer services, and complaints handling procedures.