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On March 23, the world’s largest cryptocurrency exchange by trading volume pronounced Malta as its new home, moving from Hong Kong. And others of the one thousand plus cryptocurrencies in circulation are following suit - Binance’s own rival exchange OKEX Technology; Blockchain firm Neufund; The Abyss, a gaming platform incentivising users to earn digital currencies; and the U.S. blockchain company Tron.
But what are cryptocurrencies? A cryptocurrency consists of a unit of value whose ownership is recorded in a decentralised database known as the blockchain. Blockchain technologies, which store blocks of information that are distributed across the network via a ledger, are seen as a major breakthrough, as they bring about high levels of traceability and security in economic transactions online since they are validated and recorded in a global peer to peer (P2P) network.
The Malta Financial Services Authority (MFSA) is in the process of determining the Distributed Ledger Technology (DLT) assets in Malta making the country one of the leaders of the Blockchain market. Blockchain is one type of DLT and mostly known for being the technology used for cryptocurrencies. With this Malta would be one of the first jurisdictions to actually provide for the classification of DLT assets in a clear and codified manner. The objective aims at providing legal certainty and clarity on the determination between utility and security tokens through a predetermined checklist that will be assessed by qualified professionals.
Malta’s Prime Minister, Joseph Muscat stated that he believes cryptocurrencies are “the inevitable future of money”. Following China’s extreme regulatory route fighting against cryptocurrencies, Malta’s consultation paper stating that “The proposed framework will offer legal certainty in a space that is currently unregulated” has been welcomed as it gives certainty to exchange owners about the future. Not only but they are amongst the broadest regulations for the industry as the rules cover how brokerages, exchanges, asset managers and traders operate. Moreover the 5% effective national tax rate covering international companies on the island gives an even bigger incentive.
The European Union has not so far issued any details about a cryptocurrency regulation but says is looking into it, giving Malta the chance to take the lead. Malta’s offer of transparency and legal certainty in an industry that has suffered from fraud and hacks is surely a positive.
The interest in Malta’s stance is surely gaining momentum and not only on cryptos but also on a wider spectrum. For more information, also on how to open back accounts, do contact us and we can discuss all your needs.