Maltese Crypto Company Agents Fight Back: ‘Absolutely Incorrect To Claim Lax Oversight’
A group representing Maltese agents for licensed crypto companies has hit back at a Times of Malta report raising concerns that Malta had “lax oversight” over the exchange of billions of euro worth of cryptocurrency.
“It is absolutely incorrect, both in fact and in substance, to infer that Malta has ‘lax oversight’, when the MFSA and the industry have constantly, over the past three years, sought to ensure that in seizing the enormous opportunity at hand in partaking in the greatest financial revolution of this era, priority would be given to building and securing a safe, regulated environment for operators and users alike,” the VFA Agents Business Unit within the Malta Chamber of Commerce said.
“The MFSA carries out extensive oversight over operators in this sector with regular compliance visits and other oversight mechanisms in place to ensure proper supervision of this sector. Portraying this sector as one which is not subject to adequate supervision is not a reflection of reality and does not do justice to the work and efforts of the MFSA and VFA Agents.”
The VFA Agents Business Unit issued a statement after Times of Malta reported that evaluators from the Financial Action Task Force (FATF) have flagged the way Malta attracted crypto companies to the country before enacting laws to regulate them.
This was during the period when Malta was marketing itself globally as ‘Blockchain Island’, a strategy which attracted huge players such as leading cryptocurrency exchange platform Binance and Apple co-founder Steve Wozniak.
Apple co-founder Steve Wozniak (left) with Economy Minister Silvio Schembri
After enacting the law in November 2018, Malta offered crypto companies who were already operating in the country a one-year transitory period to get regulated.
As it stands, only eleven VFA service providers are currently licensed to operate in Malta, a far cry from the buzz generated by ‘Blockchain Island’.
However, the Agent’s Unit said that such transitory periods are common practice at EU level when new regulations are rolled out and imposed on an industry.
“The purpose for such transitory period was to allow companies to familiarise themselves with the framework and to shape up their operations in line with the same,” they said.
“With such an innovative sector, it is counterintuitive to set a hard-line approach. One needs to keep in mind that up until 2018, the crypto industry was largely unregulated, with Malta being the first EU Member State to step forward and regulate it at a high standard.”
“Regulators worldwide are to this day contemplating, designing or fine-tuning their national frameworks to address the fast-changing crypto sector.”
“Regulation was deemed to be required due to the pseudonymous nature of crypto transactions, as such transactions are all transparently recorded onto a publicly available ledger, with the caveat that the identifiers of those transacting are published as strings of letters and numbers, ergo ‘wallet addresses’.”
They noted that Malta’s laws require cryptocurrency exchanges and other service providers to identify the people behind wallet addresses, both at the time of deposits and the time of withdrawals, in line with a recommendation by the FATF to combat the threat of money laundering.
Meanwhile, they said crypto exchanges have implemented robust AML rules within their operations on par with traditional financial institutions.
As for warnings that cryptocurrencies like Bitcoin facilitate money laundering, the group noted that ex CIA deputy director Michael Morell had actually described them as “highly effective” in fighting crime and gathering intelligence.
This is because since crypto transitions are permanently recorded and publicly accessible if exchanges collect KYC documentation from their users, they will be able to track all their transactions associated with their crypto wallet addresses.
“Such effective tracking has proven to be successful time and time again. While anonymous cryptocurrencies do exist, the Malta Financial Services Authority banned locally-licensed service providers from dealing with such cryptocurrencies from the very start.”
“It must be reiterated that the VFA Framework, which falls under the responsibility of the MFSA as the competent authority in terms of the VFA Act, regulates the crypto industry at a very high standard.”
Cover photo: Right: Christina Scicluna, chairperson of the VFA Agents Business Unit within the Malta Chamber of Commerce
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