Bank of Valletta’s surprise decision to ban people from transferring money to cryptocurrency exchange platforms angered several Maltese crypto-traders last night.
Although the decision by Malta’s largest bank came as a blow to traders, it is by no means a death knell and can easily be bypassed through so-called borderless banking. Digital banks like Revolut and Transferwise allow you to open up accounts free of charge and can essentially be used as a bridge – with money transferred from a BOV account to a Revolut/Transferwise account and then on to a cryptocurrency exchange such as Coinbase.
There are also technologies out there, such as TenX, which allow you to transfer cryptocurrencies to a debit card and spend the digital money directly.
BOV is not the only Maltese bank to have prohibited SWIFT payments to cryptocurrency exchange platforms; BNF has also made the same move.
HSBC Malta still allows such money transfers, although the bank has not yet responded to Lovin Malta’s question on whether it plans to follow the other banks in tightening its policy on cryptocurrencies. Satabank confirmed it isn’t stopping funds to crypto exchanges and has no plans to do so in the immediate future.
Parliamentary secretary Silvio Schembri said he is confident the banks’ crypto-ban will only be a short-term move
The banks’ policies go against Prime Minister Joseph Muscat’s call for Malta to become a pioneer in embracing and regulating cryptocurrencies like Bitcoin and the blockchain technology underpinning it. However, digital economy parliamentary secretary Silvio Schembri said in a press release he is confident the banks’ crypto-ban will only be a short-term measure.
“The Government of Malta is already on record stating that it intends facilitating a regulatory framework for cryptocurrency-related activities,” he said. “Within this context, a discussion document on regulating cryptocurrencies, Initial Coin Offerings (ICOs) and Exchanges, will be launched imminently.”
BOV’s policy was largely met with outrage by Lovin Malta’s readers, with some lambasting the bank’s scepticism towards cryptocurrencies as “outdated” and “ridiculous”.
“This is a major mistake by our leading bank,” senior KPMG auditor Matthew Abela said. “I guess it strenghtens the resolve for us in crypto to democratise banking just as should have been the case dozens of years ago.”
Keith Laferla, assistant general manager of Laferla Insurance, dismissed BOV’s logic – as quoted by people who spoke to their officials – that cryptocurrencies are associated with money laundering.
“So banks are scared that funds which they have already accepted in their accounts (so in terms of money laundering, the money has already been cleaned and deposited) are being used to purchase cryptocurrencies, because cryptocurrencies are ‘associated’ with money laundering? Makes sense,” he said.
Cryptocurrencies have shot up in popularity this past year, and indeed Coinbase had 11.7 million users at the end of October – up from 4.7 million last year. Its fans see it as the future of money, but critics such as JP Morgan Chase chairman Jamie Dimon and the European Central Bank’s vice president Vitor Constancio have compared it to ‘Tulip Mania’ – the Dutch speculative bubble of the 17th century.
Pulitzer-winner Matthew Caruana Galizia recently recounted how his mother, assassinated journalist Daphne Caruana Galizia, had said key people in Malta are pushing cryptocurrencies because they could be used to launder the proceeds of crime and corruption.