By Caitlyn Buchanan, 27.01.2020
In 2018, Malta became the first country to establish a cryptocurrency regulation framework in a bid to make itself the number one location for cryptocurrency startups. Malta received praise for its innovative and robust legislation that attracted many worldwide entrepreneurs who registered cryptocurrency startups in Malta. However, Malta has not been successful in retaining those startup companies due to a number of issues.
Malta’s Cryptocurrency Regulations
Malta’s crypto framework and set of regulations has proven to be very tough. Crypto companies have been forced to employ many legal advisors and accountants to meet the strict requirements. Due to heavy free many startups didn’t make it to application phase which includes a €10,000 payment to the Malta Financial Service Authority (MFSA) to process a preliminary application. The MFSA received 340 preliminary applications of which only 10% have resulted in completed applications.
Lack of banking options
The cryptocurrency startups that have remained on the Island of Malta are now facing another challenge, a serious lack of banking options. Pilatus Bank had its banking license revoked by the European Central Bank after the owner was charged with alleged money laundering by US prosecutors. Malta’s banks are now unwilling to lend to cryptocurrency firms as it could bring repairable damage to their reputations.
Crypto Success in Malta
There are some exceptions who have partnered with foreign banks and appear to be thriving in Malta’s crypto sector. For example, the Malta-based ZBX allows users to link bank accounts directly to their exchange through their partnership with Switzerland’s Dukascopy Bank. Although ZBX currently has not been issued a licence it remains optimistic about dealing with the MFSA.
Recent events have put the island under scrutiny but as a member of the European Union, Malta must comply with the 5th Anti-Money Laundering directive. Although the cryptocurrency regulations are full of red tape Malta’s 5% corporation tax is still the lowest in Europe. It is yet to be seen if Malta can overcome these issues and become a major hub for cryptocurrency startups and established companies.
Please note: Other countries such as Estonia, Switzerland, Finland and Austria are starting to compete and should be taken into consideration when establishing a cryptocurrency company. Euro Company Formations can assist with all aspects of registering abroad. Please Contact Us today for more information.Contact US