Malta’s Crypto Dream is Now Haunting It

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  • Malta’s crypto dream of 2018 is now turning into a nightmare
  • Malta has been put on the FATF’s “grey list”, which means it is undergoing extra monitoring
  • It is now on the UK’s ‘high risk’ list, alongside Cambodia and Nicaragua

Malta’s crypto dream is slowly turning into a nightmare. An exodus of crypto companies following its tough regulations imposed in 2018 was recently compounded after it was placed on the Financial Action Task Force (FATF’s) ‘grey list’. Malta, which welcomed cryptocurrency companies with open arms as early as 2017, has been accused of aiding financial crime thanks to its less than rigorous regulatory practices surrounding the new form of currency. As a result of its troubles, Malta was recently greylisted by the FATF and added to the UK’s list of ‘high risk’ countries, putting it in the same category as Cambodia, Nicaragua, and Senegal when it comes to its financial trustworthiness and reputation.

Malta’s Blockchain Dream Backfired

Malta hailed itself as the future of finance when it announced a desire to welcome blockchain companies in 2018, announcing plans to roll out legislation to encourage companies dealing in cryptocurrencies to set up there. Exchanges such as Bittrex and Binance set up shop there alongside a number of smaller projects, and for a while things seemed to be going well.

However, it turned out that Malta was trying to run before it was legally allowed to walk as far as cryptocurrencies went, and regulators soon announced a lengthy and expensive application process that effectively killed the nascent industry before it could even get going. This came alongside reports of money laundering using the suddenly freely accepted cryptocurrencies.

FATF Takes Action

Malta’s generous taxation rules around cryptocurrencies encouraged huge illegal use, resulting in international financial watchdogs becoming much more interested – and concerned. This concern was cemented last month when the FATF announced that Malta had joined the grey list, which it describes on its website:

When the FATF places a jurisdiction under increased monitoring, it means the country has committed to resolve swiftly the identified strategic deficiencies within agreed timeframes and is subject to increased monitoring. This list is often externally referred to as the “grey list”.

This announcement firmly sets the seal on Malta’s dreams of ushering in digital financial freedom and immediately puts it on the UK’s ‘high risk’ financial crime alert, where it joins the likes of Senegal, Cambodia, and Nicaragua. Quite a fall for a once bright start in the crypto firmament.