Why Blockchain Companies Are Heading to Malta
If you have not heard of this archipelago in the central Mediterranean between Sicily and the North African coast, you are not alone. This nation known for its rich history with the Romans, Moors, Knights of Saint John, French and British has recently gotten a lot more love especially from the crypto community.
Malta is doing everything they can to attract more blockchain businesses to come to the island, and the community is responding. In February, Malta’s government released a document called “Malta- A Leader in DLT Regulation.” Accompanying legislature followed in the proceeding weeks including the “Virtual Currencies Bill,” which gives crypto a huge green light in the country.
The CEO of OKEx released a statement saying that he looked forward to working with Malta’s government because they share many of the same values. He listed Know-Your-Customer (KYC) and Anti-Money Laundering as two examples of a mutually-shared vision. Malta is not going to be the island you go to and hide your offshore bank account. It wants to legitimise crypto through regulation and a friendly atmosphere.
Another reason businesses are going to the small Mediterranean island is not so much what Malta is doing, but rather the circumstances that the exchanges are moving away from. Both Binance as well as OKEx had trading headquarters in Hong Kong. The region has been notoriously tough on crypto exchanges, releasing a statement in February saying that financial regulators will continue policing crypto. Hong Kong is doing this to protect investors.
However, in an attempt to protect investors, companies like Binance or Bitfinex (who is reportedly moving to Switzerland) are facing a long list of legal issues in Hong Kong. This is causing the operating costs to soar, because, as you know, lawyers are expensive and court costs add up quickly. As crypto exchanges and related companies continue to face increased regulation, it only makes sense that they take business elsewhere to places like Malta, Belarus or Switzerland, countries that are attracting blockchain tech through incentives.
In addition to expensive legal fees and unwelcoming regulation in Hong Kong, exchanges and other blockchains had to spend long periods of time talking with financial regulators or government officials, sometimes as frequently as every day. It is not very conducive to business to use all of your time and energy begging regulators to not shut down your exchange or make you pay more fees. While it is one thing to stay compliant, it is another thing to constantly deal with superfluous comments from regulatory agencies.
In addition to the move out of Hong Kong, Binance recently pulled staff from an office in Japan, too. It was announced late last month that Japanese financial regulators were about to crack down on Binance’s exchange. The staff was quickly removed soon thereafter.
In the coming weeks and months, we will probably see even more blockchain and tech companies move to Malta, which is slowly becoming the Silicon Valley of the Third Web.
