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This is a new concept which has been created as part of this regulatory framework, within the VFA Act.
In essence a Virtual Financial Asset is a DLT asset which does NOT fall within the definition of ‘electronic money’, ‘financial instrument’ or ‘utility token’.
‘Electronic money’ means electronically, including magnetically, stored monetary value as represented by a claim on the issuer which is issued on receipt of funds for the purpose of making payment transactions.
A ‘utility token’ is a form of digital medium recordation whose utility, value or application is restricted solely to the acquisition of goods or services, either solely within the DLT platform on or in relation to which it was issued or within a limited network of DLT platforms.
A ‘financial instrument’ is as per various definitions outlined in the Second Schedule of the Investment Service Act, which defines Transferable Securities, Money Market Instruments, Units in Collectives Schemes and Derivatives. Please see Section ‘ Financial Instrument Test’.
Thus, in conclusion, if a DLT assets is not issued solely for payment purposes (electronic money) and not just as a way to acquire a good/service on a particular DLT platform with very limited exchangeability (utility token) and does not have features which could be related to any financial instrument, than the DLT asset will be categorised as being a ‘Virtual Financial Asset’ and regulated by the VFA Act.