Malta’s “Blockchain Island” dream at risk of turning into a pipe dream as companies give up on seeking licenses to set up businesses.
The country’s financial regulator has not licensed a single crypto or blockchain firm despite receiving over 300 applications.
According to data the Maltese Financial Services Authority (MFSA) published last week, nearly 70% of the applications have failed.
The EU island state gained massive hype and acclaim following its ground-breaking crypto regulations announced in 2018. Dubbed “Blockchain Island,” Malta sought to be a crypto and blockchain haven, promising crypto-friendly regulations. But with the latest data on the number of startups that have fallen at the first hurdle of regulation, maybe the hype was a little too premature.
Malta’s “Blockchain Island” Legislation too stringent
According to crypto publication Decrypt, insiders allege that Malta’s hitherto innovative crypto regulations are too stringent. The process of acquiring a license, the sources said, is too expensive.
Bitcoin Club Malta founder Leon Siegmund said that Malta’s cryptocurrency regulations cropped out of “technocracy, rent-seeking and EU-obedience.” Siegmund, also a director at the country’s Blockchain Association, added that what’s on the ground is the “[exact] opposite of what’s needed.”
The MFSA reportedly received 340 license applications from crypto startups in 2019. Out of all these, the regulator is yet to issue a single license.
MFSA last week warned the public against dealing with unregistered crypto companies. Alongside that, the regulator highlighted 57 companies it said did apply for licensing but failed to meet requirements by the November 2019 deadline.
The MFSA noted that only 26 startups of the total that applied are being considered. That means the majority of applicants (257, or about 70%) have been rejected. For those startups still in the hunt for a license, most are crypto exchanges.
But that excludes Binance, the world’s largest cryptocurrency exchange. Binance once held that enviable status as Malta’s favorite crypto and blockchain firm. However, things changed when the MFSA announced in February that it never licensed the crypto exchange to operate in the country.
Malta’s “Blockchain Island” dream is also on the verge of failure following the Panama Papers controversy. In the wake of the fallout, Joseph Muscat resigned as the country’s prime minister. Muscat was Malta’s most prominent blockchain supporter. Many businesses and ex-pats moved to Malta on the back of encouragement.
Since his resignation, the fate of the then-groundbreaking crypto legislation hangs in the balance.
Even though the MFSA continues to vet applications, there are no guarantees things in “Blockchain Island” will be as they were envisioned.
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