Malta, Liechtenstein and Wyoming Taking the Flower by the Thorns

In a previous article we discussed the global push to regulate cryptocurrencies — as well as multiple events — which have left people who are looking to start a crypto business or continue their operations in a dark corner. We will continue the discussion by introducing some needed hope in a place where it is needed most.

As a result of the global push to introduce tougher crypto regulations — due to the lack of proper frameworks, misconducts by crypto ICO’s and the overall risks introduced by third parties which could potentially engage in fraud or money laundering — it has become much harder for people to raise funds and establish their crypto businesses.

The good news is that countries like Liechtenstein, Malta and now even an individual state within a powerful nation — the US— are showing how you can have your cake and eat it too.

Malta: The Crypto Island

Malta has been pushing to establish a legal framework for cryptocurrencies and the blockchain technology — aka Distributed Ledger Technology (DLT) — industry.

Several consultation papers were released around such topics as Virtual Currencies, Exchanges and ICO’s. The latest consultation paper — which was open for input until the 7th of March (2018) — released by the Government of Malta sets to create a regulated framework to help flourish the crypto industry that others are shying away from.

The document has been released in the interest of “all stakeholders involved in the digital technology sector including prospective promoters, developers, administrators and auditors of Distributed Ledger Technology platforms, issuers of ICOs and brokers, exchanges and other intermediaries dealing in virtual currencies and similar assets”.

While countries like China, Japan and Hong Kong were limiting their playing field for blockchain startups, Malta created the right environment for many companies like Binance — one the world’s biggest Bitcoin exchanges — to feel secure enough to consider moving its operations to the country. This has also allowed other innovative blockchain platforms to securely grow.

In an article published by Malta Independent in July (2018), Malta’s Prime Minister — Joseph Muscat — made the following comment regarding the possibility of Binance making Malta its home:

“They are not saying that they are coming to Malta because they can do what they want… They are saying they are coming because Malta is ready to regulate us, and we are bringing the consumer the peace of mind that there are people regulating this system.” — Joseph Muscat, Malta Independent, 2018

Following up, in September (2018), Binance partnered with The Malta Stock Exchange’s (MSE) subsidiary — MSX PLC — responsible for the country’s fintech and digital asset. The subsidiary company was established to seek partnerships with blockchain and cryptocurrency companies in order to expand MSE’s operation — as well as the national fintech market.

“This partnership will allow Binance and MSE to host traditional financial assets on blockchain technology through security tokens. We look forward to bringing more innovations to Malta and further establishing our presence here.” Malta Chamber, 2018

Liechtenstein: The New Crypto Haven (for those based in Switzerland or Liechtenstein)

Many crypto startups and companies struggle to operate fully within the borders of Switzerland, as mentioned in a previous article, but other viable solutions have emerged.

Liechtenstein is one of them, and a close one. Bank Frick — a family owned and operated Liechtenstein bank — has been creating a framework for those looking to invest in cryptocurrencies. They are also offering a service to those seeking to raise funds through a token sale — aka Initial Coin Offering (ICO).

As of February (2018), investors looking to purchase cryptocurrencies — currently limited to Bitcoin, Bitcoin Cash, Ripple, Litecoin and Ether — are able to use the bank’s services to obtain and secure their cryptocurrency of choice. The range was later extended in August (2018) to include Ethereum Classic, NEM, Qtum and stellar. As mentioned in a press release:

“Bank Frick is the first financial institution in Liechtenstein to offer the trading of [several] leading cryptocurrencies and secure safekeeping via offline storage. Trading takes place within the fully regulated framework of the Bank’s processes. The offering is aimed at professional market participants and financial intermediaries.” Bank Frick, 2018

Even though this defies the principles of decentralization and the entire purpose of cryptocurrencies — where the user is in control of their cryptocurrency and its private keys — it can hopefully help those seeking to invest easily.

That is all well and good, but what about the startups, companies and entrepreneurs looking to launch an ICO? According to their website, Bank Frick offer innovative projects and startups a one-stop banking solution which includes services such as: issuance and management of the tokens, analysis of proposed business model, account administration and secure storage of collected funds.

An article published on Reuters published in July (2018) notes the following — regarding the move by Bank Frick:

“Bank Frick in Liechtenstein has become a popular alternative for Swiss entities struggling to secure accounts. It banks around 160 crypto-enterprises or projects, of which 60 are in the process of setting up an ICO… and only accepts ICOs based onshore in Switzerland or Liechtenstein…” — Anna Irrera, Brenna Hughes Neghaiwi, Reuters, 2018.

What about those who are not physically located in those countries? Enter Wyoming

While the solutions outlined above are great for those living in or those able to physically relocate to those countries, a more adaptable solution has been provided by the state of Wyoming within the US, with a holistic approach which may be able to cater for decentralized projects and entities within the US— and perhaps those outside.

We will dive into the finer details in a follow up article and try to clarify the difference between the legacy approach and one tailored precisely to match the needs of a decentralized blockchain organisation. Stay tuned.

“No vital movement can be killed except by the impatience, ignorance or laziness of its authors. A movement cannot be ‘insane’ that is conducted by men of action… At the same time it is perfectly true that if there is no response from the people, the movement will be popularly described as ‘visionary.’ …Ridicule is like repression. Both give place to respect when they fail to produce the intended effect.” Mahatma Gandhi, Freedom’s Battle, 2nd edition, 1922

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