Is Malta the centre of the cryptocurrency business market?

Since the birth of Bitcoin in October 2008, there has been much speculation about whether cryptocurrency will ever become the new way to transact globally. While today buying cryptocurrencies on trading platforms is relatively simple, it is not yet widely used for daily transactions, although this is gradually shifting.

Once the leader of digital currency, Bitcoin now competes with many other forms of cryptocurrency including Litecoin, Ripple, Neo and Ethereum, to name a few. Meanwhile the benefits of blockchain technology that cryptocurrency sits on are being recognised by mainstream global financial institutions worldwide. BNP Paribas, Santander and Barclays are just some of the household names that have been examining the opportunities it represents.

Smaller economies are also recognising the opportunities that blockchain and cryptocurrency could bring. Since passing new laws in November 2018, the beautiful Mediterranean island of Malta has positioned itself as a haven for blockchain technology and cryptocurrency companies. With low tax rates, crypto-friendly regulation and an open-minded, tech-savvy Government, Malta, or ‘Blockchain Island’ as it is known, possesses all the ingredients for businesses to succeed in this sector.

Malta has already positioned itself as a leader in other industry, with accounting for 13% of GDP (gaming). The island now hopes to apply the same growth strategy to the blockchain and cryptocurrency sector.

As a small nation, Malta’s Finance Minister, Edward Scicluna, believes it can implement ideas faster than larger countries, giving it a real competitive advantage. Malta’s economy is currently buoyant, growing at 6.6% per annum, one of the fastest growing in the world.

The future of finance?

Malta has become the first country to introduce 360 degree cryptocurrency legislation to help combat money laundering and financial crime through its MFSA (Malta Financial Services Authority). The Malta Digital Innovation Authority also provides support and regulatory guidelines for blockchain businesses. These measures mean the blockchain industry is regulated, giving greater peace of mind to consumers and more clarity to businesses.

Malta’s tax system means businesses can lower their tax rates from 35% to just 5%, and its university even has a scholarship scheme to encourage students to study a masters in blockchain, indicating that Malta believes this technology represents the future of finance. Unsurprisingly, some large cryptocurrency exchanges have based themselves in Malta.

Binance

Binance is a hugely profitable cryptocurrency exchange, making $200m profit in one quarter alone. The crypto giant launched in China, but when cryptocurrency was banned there in 2017 it moved to Japan, before relocating to Malta. It is still officially registered in the Cayman Islands.

OKEx

OKEx has also based its crypto exchange in Malta following the Chinese ban on cryptocurrency. It has two terms of service - one for Maltese and Italians and one for all others.

The future is looking bright for cryptocurrency and blockchain technology as more big businesses see the potential it poses, and tech giant Facebook looks to launch its own cryptocurrency, Libracoin. There are however some who feel Malta’s ambition of becoming ‘Blockchain Island’ may be hampered by regulatory hurdles in obtaining a license to operate.

Germany has recently passed a law that means companies have to have a German license to trade with German citizens. If other countries replicate this, Malta’s position as a magnet for cryptocurrency and blockchain companies could come under threat. For now though, while other countries baulk at blockchain, Malta is grabbing the opportunities it represents, providing a boost to the island’s economy.