Acting Malta Financial Services Authority CEO Christopher Buttigieg has criticised the island’s former ‘Blockchain Island’ strategy to attract crypto companies, warning potential risks weren’t addressed as much as they should have been from the get-go.
“I don’t like the term ‘Blockchain Island’; it was a term that was used in the past and while it was a good idea, there was a need for more investment to address the proper risks,” Buttigieg said at a FinanceMalta conference this morning.
Malta’s ‘Blockchain Island’ drive reached its peak between 2018 and 2019, with major players such as Binance CEO Changpeng Zhao, Apple co-founder Steve Wozniak and the late John McAfee all travelling to the island to toast its aspirations.
Then-Prime Minister Joseph Muscat said his dream was for Malta to become the “Silicon Valley of Europe”.
Buttigieg recounted how the MFSA’s board of governors had reacted to the government’s ‘Blockchain Island’ drive by setting up a regulatory framework.
“There was a lot of interest in Malta, we saw entities start coming over and we wanted to avoid a Wild West situation,” he said.
“We carried out a lot of research into the potential risks and identified three main ones – potential fraud, especially on ICOs, money laundering and terrorism financing risks, and cyber-risks.”
“We wanted our framework to address the main risks, which is why we introduced the concept of VFA agents, designated all operators in the field as being subject persons, and designated all transactions as bring regulate under our framework.”
“We’ve been criticised by the industry that the authorisation process took too long and that there was too much due diligence, but the goal was and is to ensure that only operators with a certain substance are here.”
In fact, he said some of the requirements in Maltese law – such as the capital requirements for crypto companies – go way beyond what the European Commission suggested in its recent legislation (MiCA) to regulate crypto-assets.
“Our onus has always been to protect the financial system and that’s what we’re doing.”
Meanwhile, Finance Minister Clyde Caruana refused to apologise to the crypto industry for his recent suggestion that the sector may need to be eliminated altogether if it is endangering the economy in the wake of Malta’s greylisting by the Financial Action Task Force (FATF).
Caruana told Lovin Malta that even though the FATF did not mention the crypto industry in its decision to greylist the country, the issue was flagged during bilateral discussions.
“I say whatever I say because I know what I’m saying and believe in it,” he said. “We had signs and information from the assessors that at times they were strongly worried about the way things were handled in this area.”
Asked if he thinks there’s a future for the crypto industry in Malta, Caruana took a cautious stance, stating that the government must sit down with its FATF assessors to address any potential pending issues in the best issue of the country.
Do you think the crypto industry has a future in Malta?