A review on Malta’s crypto and blockchain regulations a year after the establishment of its regulatory framework
Malta has some of the most aggressive approaches when it comes to cryptocurrency regulations, the small island country is considered a global leader in terms of addressing anti-money laundering and counter financing of terrorism concerns in the crypto investment space. Just recently, the Malta Financial Services Authority introduced a three-year strategic plan aimed to further modernize the country’s crypto sector. So, what kind of impact the plan could bring to crypto exchanges, as some of the biggest names in the industry have already based in Malta, and how stakeholders could benefit from that.
Malta’s Crypto Visions
Malta has long been considered as one of the most crypto-friendly jurisdictions in the world, the Mediterranean nation alongside Switzerland, Japan, South Korea, Luxembourg, Singapore, and Belarus have been taking a relatively open regulatory attitude towards cryptocurrency. One of the reasons that make Malta a crypto pioneer perhaps is its top-down approach. Maltese Prime Minister Joseph Muscat believed that cryptocurrencies are “the inevitable future of money”, his vision of creating a crypto-based new economy has led to the drafting of the country’s crypto regulatory framework, which encompasses how crypto exchanges, brokerages, asset managers and traders should operate in the country. The framework makes Malta the first EU country that offers legal assurance in an area that is currently unregulated.
“The concept of cryptocurrencies excites me as it strikes at the heart of a key philosophical element that economy students are taught at the beginning of their course.”— Joseph Muscat, Prime Minister of Malta
Three-Year Strategic Plan
In early September 2019, the Malta Financial Services Authority, or MFSA, announced the Strategic Plan 2019–2021, the document highlighted the role of the newly established Malta Digital Innovation Authority or MDIA, and how it will lead the future development of the crypto industry on the island.
The Authority acknowledged the regulatory challenges that the crypto sector is facing, saying that “the innovations in blockchain and crypto technology present challenges in the prevention of money laundering and terrorism financing.” That’s why the MFSA will employ so-called “SupTech” intelligence tools, which will put regulators in a better position to identify fraud, prevent money laundering, and funding terrorism. In other words, Maltese regulatory bodies will start to take progressive approaches and actively monitor licensed crypto service providers using a more advanced tool.
While it seems like those Malta-based crypto firms will be under closer scrutiny, however, the target of the Maltese government’s action seems more about the remote gaming sector rather than the crypto industry.
In early January this year, the International Monetary Fund warned Malta that the blockchain together with the financial and remote gaming sectors, and the strong demand for the citizenship-by-investment scheme as posing threats to anti-money-laundering efforts. The IMF has urged the Maltese regulators to implement a 50-point action plan and highlighted the need for “immediate action” to close the gaps in supervisory and enforcement systems.
The Three-Year Strategic Plan is part of the efforts to address the concerns from the IMF, instead of putting the crypto industry under a microscope.
The crypto community in Malta remained positive about the outlook of the blockchain development in Malta, one of the landmark projects in the pipeline is the decentralized token exchange project from OKEx and Maltese Stock Exchange. The OKMSX project, which first announced in early 2019, was a key crossover for both parties and a showcase of innovations of blockchain. The project is set to launch in 1Q20.
“This joint venture marks our confidence in the Maltese government as well as our commitment to providing an efficient, secure, and transparent blockchain trading environment to clients worldwide. We are excited as it is finally happening in 2020.”— Andy Cheung, Head of Operations at OKEx
Markets expect that the upcoming Delta Summit in Malta will give a sneak peek of the latest development in blockchain and cryptocurrency technology, and we will keep a close eye on that.
Disclaimer: This material should not be taken as the basis for making investment decisions, nor be construed as a recommendation to engage in investment transactions. Trading digital assets involves significant risk and can result in the loss of your invested capital. You should ensure that you fully understand the risk involved and take into consideration your level of experience, investment objectives and seek independent financial advice if necessary.