Is Malta’s Status as the Blockchain Island Stalling?

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Malta has dubbed itself the blockchain island and Joseph Muscat – Prime Minister of Malta – has frequently said that Malta is the first country in the world to regulate the blockchain industry. While the country has taken massive steps towards becoming a global blockchain hub, things on the ground appear to be stalling slightly. Malta is set to host the Malta Blockchain Summit in a couple of weeks – boasting guests such as John McAfee and the Winklevoss twins – but is Malta ready to handle the big names in the crypto world?

Crypto Friendly Laws Still Pending

The Maltese government has already passed three crypto-friendly bills into law – it did this back in July – but they are yet to become live. This means companies operating in the blockchain and crypto industries can begin preparing for these new laws, but are yet to be governed by them. The Malta Financial Services Authority (MFSA) has told numerous companies to slow down and wait to apply for regulation in the crypto industry. This is due to the fact that the laws don’t become live until mid-November.

Buying Crypto is Nearly Impossible

Surely on the blockchain island buying crypto would be easy, right? Well, it is unless you have a Maltese bank account. According to Maltese banking policies, no bank on the island will let its customers buy cryptos using their bank card or with a bank transfer. While there are a few work arounds, they are all a bit frustrating, especially if you want to buy cryptos immediately. Sure, people with Maltese bank accounts can buy Bitcoin using Revolut or Skrill, but then you don’t have any control over the Bitcoin. These platforms work by using internal ledgers to keep records of all transactions, and selling you exposure to Bitcoin.

When speaking to Revolut to confirm whether users actually buy a new Bitcoin or not, all the representative could say was “[when buying Bitcoin,] you are in possession of the value of 1BTC which changes according to the movements on crypto market.” The careful choice of wording gives the impression that you only own the value of 1BTC rather than an actual BTC. When we spoke with Lorenzo Pelligrino – Skrill CEO – he said “As of now users can essentially buy an interest into an underlying crypto asset through Skrill. We do not offer crypto wallets to users, and they do not own the cryptocurrency.”

In addition to this, with both of these platforms you cannot trade the Bitcoin out of the platform, meaning it’s not a true gateway into the crypto world. In our books, if you the Bitcoin isn’t in a wallet you have control over – in other words you can’t transfer the Bitcoin out of the platform – then you don’t actually own the Bitcoin.

There are a few ways to skirt around this problem. The first being that you can open a bank account with an international bank or Revolut. You then make a bank transfer from this new bank to the crypto exchange of choice. The second method is to head down to Sliema and use Moon Zebra’s Bitcoin ATM. This is by far the quickest and easiest option to bypass anti-crypto banking policies in Malta. Alternatively, if you have a friend who has some cryptos already, do a private trade with them – however we strongly encourage you to always buy through an exchange for security reasons.

Nowhere to Spend Crypto

For a blockchain island, there are remarkably few places that accept Bitcoin – or any other crypto for that matter – in the country. According to Coinmap, there are only nine venues that accept cryptos across Malta and Gozo, but the real number is estimated to be around 40. For a nation that is reportedly crypto crazy, that number is tiny. However, when you factor in the fact that it’s virtually impossible for Maltese people to get their hands on cryptos with ease, you can understand why hardly any companies accept cryptos in Malta. Let’s hope that people attending the Malta Blockchain Summit bring their fiat currencies with them too.

The Cash Equation

Malta is still very much a country where cash is king. It has yet to move on from cash to card payments, leaving people who stray from the touristic areas needing to carry wheelbarrows of cash in order to live day to day. When BitStarz News spoke with Jonathan Galea – a self-confessed Maltese blockchain expert – about the monumental jump Malta has to make from cash to crypto he said, “Malta still has to make the transition from physical to digital. Hopefully, we’ll be able to leap-frog the transition to credit cards and proceed immediately to crypto.”

Using ICOs for Personal Gains

Paolo Catalfamo – CEO of Palladium – is believed by many to be using his company’s ICCO to achieve a goal he couldn’t as a personal investor. He has long had his sights set on becoming the top dog at Lombard Bank, but has had his bids to buy a controlling share in the bank continuously shot down. In his endeavors to gain control of Lombard Bank he has created an ICCO – Initial Convertible Coin Offering – to raise money in order to buy out everyone from Lombard Bank. He promises to merge a crypto exchange with the bank and then convert all tokens into the equivalent of shares – raising the question, why didn’t he just opt for an IPO? This dubious behavior is starting to raise a lot of questions about the Maltese crypto industry.

First Maltese Crypto Scam

Crypto scams are everywhere you look, but you wouldn’t expect one to be so prominent in a regulated crypto environment. Maltese Scudo has scammed investors out of thousands of euros, and if you follow the trail, all you will find is an empty garage in a housing estate. When the MFSA were alerted to this scam, they took no action, giving the feeling that they just don’t care. This is the wrong attitude for crypto-friendly Malta to take, and could possibly harm its future in the industry.

However you choose to look at the crypto situation in Malta, it’s all about the optics. You can choose to look at the rosy side where the country has passed a couple of crypto-friendly laws and is hosting a summit, or you can dig a little deeper and see that it’s currently no better than Venezuela and the Petro. Malta has the potential to become a wonderful haven for crypto and firms operating in the crypto industry, it’s just not quite ready yet.