HOLD, a fee-free cryptocurrency exchange that launched in 2018, has become the latest crypto company to despair with Malta’s revamped crypto licensing requirements and has temporarily halted business. HOLD announced the closure yesterday, citing the difficulty in complying with the country’s 2019 Virtual Financial Assets (VFA) license as the reason for suspension of services, calling it “restrictive” and looking for other ways to continue operating.
The VFA Strikes Again
HOLD, which began life as a “people to people” crypto lending service in early 2018, transitioned into a platform where users could buy, sell, and exchange crypto without fees, launching their own Visa card into the bargain.
Being a Malta-based entity, the company found themselves beholden to a new raft of financial regulations by Maltese authorities aimed at clamping down on illegal crypto practices, one of which was the implementation of the onerous VFA license in 2019.
As HOLD say in the Medium piece regarding their suspension of services, this new legal framework, for which they applied last year, has proved too difficult to navigate and has resulted in them having to close the business rather than operate outside of the law:
Over the following months, it became increasingly clear that the legal framework (VFA) was too restrictive and didn’t allow HOLD to be competitive. This created issues, not only for us, but also other companies as the news made publicly available, and led to many abandoning their plans to operate from Malta. Today we, too, are announcing that HOLD will no longer pursue the mandatory licenses in Malta.
Alongside the strict new regulations, HOLD also blames the “long-lasting” bear market for “putting financial strain on us”, despite the company raising $14 million at ICO in May 2018.
“Committed to Finding a Way Forward”
HOLD state that they are “committed to finding a way forward and re-start these services”, which could involve relocation and a search for more funds, but as of now the platform is to be shuttered at the end of April, with deposits halted immediately. All users are advised to withdraw their funds as soon as possible.
HOLD’s situation has echoes of another company, Rialto, who folded after they failed to get their exchange platform within the guidelines set by Maltese authorities. Malta was once heralded as the “blockchain island”, but after having had to clamp down on misuse of cryptocurrency as a result of their success in this endeavor, they are now at risk of seeing legitimate businesses go under and, as a result, turn into nothing more than a blockchain garage.