Maltese foundations can be used to issue tokens and carry out trading activities resulting from such operations.

This article was written by Dorita Cardona and Joshua Chircop.

Following the introduction of the crypto laws, namely the Virtual Financial Asset Act, the Malta Digital Innovation Authority ("MDIA") Actand the Innovative Technology Arrangements and Services Act, which laid the foundations for Malta's innovative technology sector, Maltese foundations can now be used to issue tokens and carry out trading activities resulting from such operations.[1]

A foundation may, subject to such authorisations as may be necessary under applicable laws, issue tokens and carry out any trading activity resulting from such foundation owning, administering or otherwise operating an "innovative technology arrangement", as defined under the MDIA Act, or carrying out such other acts involving tokens to establish rights, powers, benefits or purposes with reference to users or beneficiaries as may be stated in any whitepaper relating to the issue of such tokens.[2]

These amendments also apply to voluntary organisations, providing such organisations with similar capabilities to own, administer or otherwise operate, an innovative technology arrangement and to receive profits.[3]

These amendments overcome certain obstacles in the law which previously prevented the establishment of foundations and/or voluntary organisations with the scope of trading or carrying out commercial activities, even if the proceeds of such efforts were intended for social purposes.[4]

These changes are being seen as the stepping stone to future legislation establishing a new type of foundation, specifically tailored to the innovative technology sector.

1.   By virtue of Act No. XXXI of 2018
2.   Article 32A (1) (d) of the Second Schedule to the Civil Code
3.   Article 38 (4) of the Voluntary Organisations Act
4.  Article 32A (1) of the Second Schedule to the Civil Code