Malta’s efforts to become ‘the Blockchain island’ seem to be reaping fulsome results, with a spate of announcements from various international companies, which, attracted by Malta’s innovative proposed distributed ledger technology (DLT) regulation, have announced their intentions to set up business here.
The DLT policy document – which runs contrary to the cautious stance being taken by most governments worldwide – seeks to set up the Malta Digital Innovation Authority alongside other legislation to provide legal certainty in the sphere of Blockchain technology and cryptocurrencies. So far, few, if any, attempts have been made to regulate this technology by any institution or body around the world. Less than two months after the announcement was made locally, the companies have already started flocking, and causing a stir.
Binance, which as of January 2018 was the largest crypto-exchange in the world, with a market capitalisation for its BNB coin of $1.3 billion, announced late in March that it was planning to open an office in Malta. “We are very confident we can announce a banking partnership there soon,” CEO Zhao Chengpeng said, adding, “Malta is very progressive when it comes to crypto and fintech.” Its announcement was quickly followed by the news that OKex, another large digital asset exchange with a daily transaction volume of over $1 billion, plans to open up offices in Malta. OKex’s CEO Chris Lee said that the Maltese government shared the same values as OKex, and that this was one of the aspects that attracted the exchange to the island.
Then Berlin's Blockchain-based equity fundraising platform Neufund also announced its intention to open a satellite office in Malta, with Neufund CEO Zoe Adamovicz stating that "Malta should serve as a model for other countries and regulators.” Meanwhile, DQR Group – a conglomerate of DQR, DQR-X, DQR-GIVE, and DQR-Services, whose partners include Genesis Mining, Blockchain Consulting, Logos Fund, and Draglet – announced just last week its decision to establish its headquarters in Malta, with CEO Kristian Haehndal stating that Malta will undoubtedly become “the worldwide epicentre of the Blockchain ecosystem in the near future.” And at the end of April, non-profit organisation Poseidon, which uses Blockchain technology to help individuals, governments and companies address their carbon footprint through financial transactions, announced that it would be domiciled in Malta.
The number of companies flocking to Malta has attracted the attention of the international press, with many commenting on Malta’s intention to become ‘the Blockchain island’. “Malta is an EU member state which recently announced that they will be supporting Blockchain industry and will provide the technical infrastructure and regulatory support. Ever since the announcement, the company has grasped a lot of attention in the crypto-space,” an article on AMBCrypto read.
“Malta has recently turned into a hot destination for business in the cryptocurrency and Blockchain space for its crypto-friendly rules. With growing regulations from around the globe, fintech companies are considering to shift their operations to Malta that provides a conducive environment to operate,” according to Coinspeaker, a widely-read fintech news source.
“There are a few different reasons why Malta is so appealing to Bitcoin companies. The region is rather open-minded when it comes to regulating this industry. Its focus on Blockchain and cryptocurrency is positive overall and allows for innovation. Several firms are actively looking to move to Malta due to regulatory pressure in their home country,” NewsBTC said. “It now seems dozens of cryptocurrency companies are looking to set up shop in Malta. Doing so is rather simple, compared to dealing with requirements in other countries. Making it more accessible for companies to set up an office in Malta is an example other countries should pay attention to as well.”
Bitcoin Magazine remarked that “Malta is not the first European nation to promote itself as a Blockchain haven and try to attract capital and talent with crypto-friendly regulations, but the fact that it is a member of the EU could make it more appealing than, for example, Switzerland’s ‘Crypto Valley’.”
However, Malta’s recent spate of high-profile scandals threatens to overshadow its trailblazing success in this sector. Bloomberg Businessweek commented, “transparency and legal certainty should be a positive for an industry that’s suffered from fraud, hacks and sudden regulatory crackdowns. But Malta’s recent economic success has been overshadowed by corruption and money-laundering scandals, including the death of a journalist who wrote about alleged graft in the highest ranks of the government. Some European Union lawmakers have raised doubts about Malta’s rule of law, a point strongly challenged by Muscat.”
Blockchain in Malta will no doubt continue to make headlines throughout the year. Besides the new operations setting up here, more of which are sure to follow, Malta’s first Blockchain Summit is set to take place in November, with no fewer than 4,000 delegates, 100 speakers and 150 sponsors and exhibitors from prominent players in the emerging Blockchain and DLT sector expected. As for Malta’s ambitions to become ‘the Blockchain island’, the momentum and drive to stay at the forefront of global innovation will surely serve it well, but it has to be coupled with responsibility, accountability and good governance if it wants to keep punching above its weight in this emerging sector.
This article originally appeared in The Malta Business Observer