Malta Leads the Charge in Blockchain Financial Regulation
Malta has made history by becoming the first country to pass comprehensive crypto regulations, paving the way for greater development and adoption of blockchain technology.
A Proactive Approach
The tiny Mediterranean island nation’s proactive approach has already attracted 15 global companies, including cryptocurrency giant Binance. Malta’s regulatory framework is comprised of three key pieces of legislation:
Key Legislation
- Malta Digital Innovation Authority Act
- Innovative Technology Arrangements and Service Act
- Virtual Financial Assets Act
These laws create Initial Virtual Financial Asset Offerings (IVFAOs) and Virtual Financial Asset Exchanges, providing a comprehensive legal framework for the crypto industry to grow.
Critics’ Concerns
However, critics argue that Malta’s refusal to treat digital coins on the same level as fiat currencies undermines the project. Despite this, the government has made significant strides in regulating the industry, with a major goal being to prevent money laundering and terrorism financing.
Regulatory Requirements
- All crypto exchanges are required to submit detailed plans for preventing illicit activity.
- IVFAOs must submit white papers to the Malta Financial Services Authority (MFSA) before crowdfunding.
- Companies must obtain a license from the MFSA, a process that takes around 12 months and costs roughly €24,000.
Industry Insights
Philipp Sauerborn, International Tax and Crypto Advisor at Maltese law firm Dr. Werner & Partner, notes that the regulation is “very, very closely related” to traditional financial regulations, making crypto businesses equal footing with traditional companies.
Attracting Business and Interest
Malta’s approach has attracted significant interest from businesses looking to establish themselves in the crypto industry. The country’s eagerness to promote crypto and blockchain isn’t limited to business, with potential applications also being explored for civil society.
Potential Applications
- Corporate cryptocurrency
- Blockchain-based projects
Conclusion
Starting a crypto or blockchain business in Malta requires significant investment, both in terms of time and money. While companies looking for a quick start may opt for other destinations like Estonia, those ready to play in the big leagues will find Malta’s regulatory framework an attractive entry point into the industry.
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