Background to the peer review
ESMA peer reviews such as this one involve independent experts assessing the practices of a specific NCA, in this case the MFSA, to ensure consistent application of EU regulations, identify areas for improvement, and promote best practices across all NCAs.
This peer review analysed the approach adopted by the MFSA in the authorisation and early supervision of CASPs, providing recommendations to strengthen these processes. The review covered:
- Authorisation assessment: Whether the MFSA thoroughly evaluated the CASP entity’s compliance with authorisation requirements, including ownership, governance, group dependencies (e.g. IT systems), risk management (e.g. booking model, Web3 usage), conflicts of interest, enforcement readiness, and AML/CFT/Sanctions compliance.
- Post-authorisation supervision: Whether the MFSA effectively used its supervisory powers to respond to events after the entity was authorised, including reassessing its continued eligibility.
- Supervisory capacity: Whether the MFSA’s overall supervisory framework and resources were sufficient to carry out both the initial assessment and ongoing oversight.
Recommendations to all NCAs
NCAs are encouraged to enhance EU-level coordination by sharing supervisory insights and risk assessments on significant CASPs through the Digital Finance Standing Committee (DFSC). They should actively engage in ongoing policy discussions and adopt a forward-looking approach in authorisation processes, with careful scrutiny of governance, group structures, ICT resilience, and potential conflicts of interest. Particular attention should be given to risks linked to DeFi and Web3 products, ensuring appropriate controls and clear client communication. Lastly, NCAs are urged to strengthen supervisory capacity by exchanging best practices and resource strategies across the EU.
Malta's good standing
Malta's proactive approach to crypto regulation has earned a degree of commendation in the peer review. Having said that, the review did recognise that some challenges remain in terms of issues not being fully resolved when MFSA granted the CASP authorisation and some risks areas not being fully assessed during authorisation. However, it was observed that the MFSA has demonstrated a good level of expertise and supervisory cooperation.
The MFSA was recognised for its strategic efforts to build specialised supervisory capacity, including targeted engagement with local universities, comprehensive staff training programmes, and robust cooperation with domestic and international authorities. Its early and ongoing outreach to the industry to support a smooth MiCA transition further underscores its leadership in the sector. As one of the EU’s earliest regulators to adopt a dedicated crypto framework with the 2018 VFA regime, Malta has demonstrated a sustained commitment to innovation, effective supervision, and regulatory excellence.
The findings affirm that the MFSA possesses the necessary expertise, infrastructure and collaborative mindset to continue playing a key role in shaping a secure and integrated EU crypto-asset market.
This article was written by Associate Maegan Grech
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