Why Everyone Important in Blockchain is Flocking to Malta
By Charlotte Kng
Dubbed the “Blockchain Island” by Michael Bianchi, Malta is soon making a name for itself beyond its all-time disposition as THE vacation destination. The recent years have seen a surfacing of fast-track approvals for cryptocurrency businesses and bureaucratic trims in the European Union’s smallest economy, helmed by a Prime Minister best known for his economically liberal policies.
“Welcome to #Malta @binance. We aim to be the global trailblazers in the regulation of blockchain-based businesses and the jurisdiction of quality and choice for world class fintech companies.”
- Joseph Muscat, Prime Minister of Malta
With a leader so ready to embrace cryptocurrency and all things blockchain, it’s hardly surprising that heavyweights are cruising into this tiny nation. But, what exactly is driving everyone important in the blockchain space to this coastal nation?
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Setting the Tone with Legal Certainty
Here’s what we meant when we spoke of the economically liberal policies passed by Muscat. Just this July, three more economic bills have been passed by the jurisdiction; these are not just any bills — they are ones that are engineered specifically to lubricate the influx of cryptocurrency businesses.
Let’s begin with the most famous of the three — the Virtual Financial Assets Act (VFAA). This bill was established with the sole aim of regulating Initial Coin Offerings (ICO), which means its main job is to establish the regulatory regime governing ICOs, cryptocurrency exchanges, wallet providers and all platforms relating to cryptocurrencies. This bill sets the prerequisite steps for compliance, protecting users from fraudulent platforms. In any case, entrepreneurs interested in setting up shops in Malta have to be ready to bare it all or lose out.
At the same time, the Malta Digital Innovation Authority Act (MDIA) was passed to certify Distributed Ledger Technology (DLT) platforms. An industry-specific body behind this act, known as the ‘Malta Digital Innovation Authority’, was put together to ensure credibility and provide legal certainty to consumers of DLT platforms in Malta. In essence, the everyday crowd no longer has to be on their tippy toes when it comes to surveying the quality of the DLT they patron; MDIA will handle it.
Behind these two bills lies a third, known as the Innovative Technology Arrangements and Services Act (ITASA). It is primarily operation-based and deals with DLT arrangements and certifications of DLT platforms, including the setting up of exchanges and other companies operating in the cryptocurrency market. In other words, this is the executing arm behind the brains that is the VFAA, ensuring that all operating enterprises are recognised in the eyes of the law.
The Maltese government knows just the right spots to hit in order to keep consumers feeling safe and protected; it is no wonder the petite nation is garnering so much interest.
Welcoming BINANCE…and the Throngs of Fanatics Trailing Behind it
Resting snugly at the top of the crypto exchange realm is Binance, the most highly-coveted cryptocurrency exchange at the moment. Established just a year ago in July 2017, Binance has risen quickly as the world’s top cryptocurrency exchange by trading volume within just the short span of a year. As at press time, the crypto powerhouse manages a 24hr trading volume of more than USD 600m, easily USD 200m above it’s strongest contender OKex. The effect: triggering similar moves from other crypto heavyweights within the space.
“We are very confident we can announce a banking partnership there soon…Malta is very progressive when it comes to crypto and fintech.”
- ChangPeng Zhao (CZ), Founder and CEO of Binance
This move is not just going to lay out employment opportunities for people in the Maltese blockchain space; from a broader perspective, we can expect the genesis of an elaborate ecosystem specific to incubating and accelerating promising cryptocurrency initiatives.
Find this hard to believe? Shortly after news of Binance’s move broke, rival exchange OKEX Technology Co., Berlin-based blockchain firm Neufund and Crypto-Visa card service Monaco all hopped on the bandwagon and announced their intention to be a part of the new blockchain economy in Malta.
A Comfortable Tax Climate
“We will never allow the EU to decide on behalf of the Maltese people on how to run our tax systems. That was, still is, and must remain, the competence of the respective governments.”
- David Casa, Roberta Metsola and Francis Zammit Dimech, Members of the European Parliament (MEP)
Malta has always been known for its pro-crypto stance and this is evident from their policies, including those with regards to corporate tax. Companies are generally chargeable to Maltese tax at a rate of 35% but with the application of the participation exemption, full imputation system and refund system, corporate tax rate can go as low as 5% — one that is extraordinarily low when compared to the rest of the world.
With cryptocurrency businesses slowly easing into its place as one of the most lucrative trades of the 21st century, tax incentives are a smart way to go in setting a conducive environment for growth.
The world may be trying to catch up with the evolution of the digital age but here Malta is, already a step ahead forging paths and connections with all the right people, through all the right courses.
