Malta: The EU’s Crypto Leader

The fast-growing number of cryptocurrency and blockchain technology-based businesses encourage more governments worldwide to introduce legal frameworks for regulating such companies.

In order to strengthen its position as an attractive destination for cryptocurrency exchanges, Malta has recently decided to introduce a comprehensive regulatory environment for companies offering services in the field of cryptocurrencies, which aims to provide more legal certainty and stimulate cooperation between cryptocurrency businesses and local financial institutions. At present, due to the strengthening of the EU anti-money laundering rules, cryptocurrency businesses find it difficult to set up bank accounts and complete their financial transactions in Malta.

The Maltese government introduced for reading in the parliament three bills related to blockchain technology. These three below are examined in more detail below.

  1. Virtual Financial Assets Bill, which regulates cryptocurrencies and initial coin offerings (ICO). The Bill introduces the regulatory regime for cryptocurrency exchanges. Moreover, the Bill gives “the necessary regulatory and investigatory powers” to the Malta Financial Services Authority to regulate, monitor, and issue penalties to ICO companies and exchanges trading with virtual currencies. The intermediaries that are subject to the Bill include exchanges, brokers, wallet providers, investment advisors, and asset managers.
  2. Digital Innovation Authority Bill, which establishes Malta Digital Innovation Authority and sets rules for its internal governance. The Digital Innovation Authority will issue certifications for platforms operating on the basis of Distributed Ledger Technology (DLT). DLT companies that would like to start operating in Malta will have to first register with the Authority.
  3. Technology Arrangements and Services Bill, which deals with the registration and certification of technology service providers, including system administrators and auditors.

If enacted, the laws will attract companies that operate in the industry of cryptocurrencies as Malta will offer to such companies legal clarity, a competitive tax regime, and excellent business infrastructure.

Due to the fact that “Malta is very progressive when it comes to crypto and fintech”, the largest cryptocurrency exchange in the world “Binance” plans to move its offices from Hong Kong, where it is currently established, to Malta. The equity fundraising platform “Neufund”, the digital asset exchange OKEx, and the blockchain platform Poseidon Foundation plan to follow the footsteps of Binance.