One of Malta’s leading crypto experts has called out Finance Minister Clyde Caruana and Shadow Finance Minister Mario De Marco for throwing the entire fledgling industry under the bus in the wake of Malta’s greylisting by the Financial Action Task Force (FATF).
Jonathan Galea, a lawyer and consultant on the blockchain industry, wrote an impassioned Facebook post after the two politicians agreed with each other’s assessment of the crypto industry during a debate on Xtra last night.
“Words cannot describe my disappointment, seeing two representatives from the two main political parties who unanimously approved the Virtual Financial Assets Act in 2018, yet now are wiping their hands clean from any involvement in relation thereto,” Galea said.
“Of course you would – you were all too happy to parade in front of the whole world when the going was good, yet now you slink away, bleating senseless things that are based on wrong assumptions.”
During yesterday’s show, De Marco argued that the economy should become more “strategic and quality-focused” in light of warnings by foreign jurisdictions that the crypto industry is “high-risk”.
Caruana concurred, warning that the FATF flagged “significant” issues related to the volume of transactions which took place in the past.
“I won’t mince my words. We need to take significant action in this regard, because if something is endangering other things, you might as well see whether to regulate that thing more, reduce it or even eliminate it altogether.”
He added that his concern was related to the financing of terrorism and “other things that can hurt people”.
Caruana’s reference to “a volume of transactions which took place in the past” tallied with a recent Times of Malta report which claimed the FATF had flagged “lax oversight” by the Maltese authorities on €60 million in cryptocurrencies which moved through the jurisdiction in the past.
This assessment has been challenged by the Virtual Financial Assets (VFA) Agents Business Unit within the Malta Chamber of Commerce, which warned it’s absolutely incorrect to claim oversight of the sector is lax.
However, Galea argued that the only Malta-based crypto company that was large enough to process the said billions was Binance, a leading global cryptocurrency exchange which has two companies in Malta – Binance Europe Services Ltd, and Binance Marketing Services Ltd.
Referring to publicly available data, he pointed out that these two companies generated a total of €600,000 over 2018 and 2019, while the Binance Group generated around €1.6 billion worldwide over the same period. This means that a mere 0.03% of the crypto exchange’s global revenue was processed through its Maltese companies.
“How could crypto companies in Malta operate, when no bank would open an account for them?” Galea asked. “How can you stick a finger up in the air and claim billions were processed through Malta, when you never even bothered understanding the industry?”
“How can you say that the framework needs more robustness, when we are told, day in day out, that our framework is one of the strictest ones in the world?”
“You are cowards, because you will use an ailing, fledgling industry as the scapegoat for your other giant mistakes. Shame on you.”
In 2018, Malta sought to position itself as a global hub for the crypto industry by passing laws regulating the sector, popularising the moniker ‘Blockchain Island’.
However, many people in the industry warned that the regulation was too strict and indeed only eleven VFA service providers are currently licensed to operate in Malta.
As recently as January, Economy Minister Silvio Schembri – who had pioneered the legislation – expressed confidence in the future of the crypto industry, pledging to push harder to ensure the island establishes a foothold in the area.