A lot is reported in the crypto and mainstream press about Malta and its open stance towards companies innovating with both cryptocurrency and blockchain tech. However, it appears that many start-ups are struggling to secure banking services with the island’s financial institutions.
According to a report in the Times of Malta, banks have been more receptive to blockchain companies than those building companies around digital assets themselves. However, their inexperience with the technologies often means they fail to make a distinction between the two.
Even Banks in Malta Remain Wary of Crypto
NewsBTC has reported many times about the favourable blockchain and crypto business conditions being cultivated by the government of Malta. In fact, the nation’s embrace of the technology is likely behind the stellar economic growth forecast for the island by the EU earlier this year.
A lot had been made in the press of Malta’s embrace of blockchain and crypto.
However, all is not perfect for the blockchain and crypto start-ups setting up or shop or moving operations to Malta. Reports at The Times of Malta claim to have spoken to numerous sources – company service providers, legal companies, and corporate finance firms – who informed the publication that banks were declining services to both crypto and blockchain start-ups on the grounds that it was too risky for them. For client confidentiality reasons, these sources’ anonymity was respected.
The publication reports that banks were failing to distinguish between blockchain start-ups and those focusing on digital assets themselves. Parliamentary Secretary for Financial Services Silvio Schembri stated:
“The general understanding is that when it comes to crypto operators, banks are waiting for operators to obtain an MFSA (Malta Financial Services Authority) licence before opening their doors – which is understandable.”
However, Schembri did add that there should be more effort made to understand the industry correctly and that he would be personally meeting with banking executives and share holders to provide the necessary guidance:
“One should make a clear distinction between blockchain operators and crypto operators.”
Banking Difficulties Haven’t Taken the Shine off Malta
Despite reports of crypto start-ups struggling to secure banking services, Malta seems to still be proving a popular destination to do business for the space’s young firms. The MFSA reportedly received 28 applications from start-ups hoping to be licensed as a Virtual Financial Asset Agent since November.
However, such applications are not dealt with quickly given the perceived risks associated with the industry. A spokesperson for the MFSA stated that the precise timeline for granted a licence under the Virtual Financial Asset Act depended on how well each individual firm satisfied anti-money laundering and counter terrorism checks. They added:
“As Malta’s first line of the defence, the MFSA’s assessment with regard to VFA Agent applications is thorough and includes inter alia a rigorous competence assessment as well as checks on the applicants’ proposed governance and business model.”
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