Malta’s early effort to recruit the bitcoin industry has been labeled “problematic” by the Financial Action Task Force, a membership group that comprises 37 states and two regional organizations.
Though inadequate regulatory supervision has prompted worries about money laundering and other financial crime, Malta’s ambition to become a worldwide enclave for digital assets appears to be working.
Since the tiny Mediterranean state initially launched its “blockchain island” policy in 2017, around $71 billion, or 60 billion euros, worth of cryptocurrencies has flowed through Malta, according to the Times of Malta. Although Malta’s crypto-focused rules have been improved in recent years, financial watchdogs are concerned about the country’s anti-money laundering framework.
Last week, the Financial Action Task Force, or FATF, convened in Paris to consider whether Malta should be added to a list of nations that have failed to meet their financial crime responsibilities. The financial watchdog is particularly worried about Malta’s early acceptance of cryptocurrencies in 2017 and 2018 when the industry was considerably less regulated. Officials from the FATF have also voiced concerns about the country’s law enforcement system.
In 2018, many blockchain businesses, including cryptocurrency exchange Binance, opened offices in Malta to anticipate more favorable legislation. Companies that started up shop in the nation were permitted to operate for up to a year without obtaining a license. According to an industry insider, the one-year grace period contributed to an increase of high-risk transactions carried out by bitcoin exchanges in an unregulated environment.
Despite this, Malta is still viewed as a desirable location for crypto-asset companies. Crypto.com just received Malta’s Class 3 Virtual Financial Asset License, as reported by Cointelegraph, opening the path for greater acceptance of cryptocurrencies across the European Union.
Malta’s blockchain aspirations were extended in June 2020, with the country shifting to digital assets more holistically as a method to boost adoption and commercial success. “We’re moving away from blockchain island and toward a digital island because we believe more in this holistic vision that incorporates all elements and technical components,” Kearon Bruno, head of Malta’s Digital Economy Think Tank, said at the time.