The Malta Financial Services Authority’s (MFSA) new guidance note intends to warn the public about cryptocurrency investments and related risks, and educate people on how to identify and avoid scams and fraudulent schemes.
The guidance reportedly outlines the most common types of digital currency-associated scams, which include fake iInitial coin offerings (ICOs), crowdfunding ventures promising higher gains which are availed of once the coin becomes active, and fake exchange platforms and fake e-wallet apps.
The document also provides a list of the 11 most common warning signs potential investors should consider, including “unrealistically high rates of return which are usually higher than the market average; promises that any funds deposited are 100% guaranteed; aggressive selling techniques which put pressure and rush you to secure a sale; contradiction between documents and spoken information” among others.
In early April, the MFSA approved its first 14 crypto assets agents that previously sought a license. The approval came five months after the Virtual Financial Assets Act, which was adopted by Maltese government last year, came into power. The agents are now obliged to evaluate their customers’ business plans and ensure they are properly prepared before submitting an application to the MFSA.
In March, the MFSA appointed blockchain security firm CipherTrace to monitor activity by crypto businesses in Malta. CipherTrace is now responsible for overseeing regulatory processes and audit risk management of virtual asset businesses licensed in Malta. The United States-based blockchain security company will assist the MFSA in combating money laundering and financing terrorism risks associated with entities involved in crypto businesses.