There is a growing battle between small European nations that are looking to boost their economies by drawing cryptocurrency and blockchain companies into their borders by introducing regulation that is friendly to the blockchain industry.
Two such nations that are currently in tight competition to win the favor of the cryptocurrency and blockchain industry are Gibraltar and Malta, and due to recent geo-political events in Europe, it now appears that Malta is pulling ahead in the competition due to its solidified position to stay in the European Union.
For the past several years, Gibraltar and Switzerland have both been seen as the go-to countries for companies working with Distributed Ledger Technology (DLT), but since Brexit, companies are now looking to be located in a country that grants direct access to an entire market.
Before the start of the Delta Summit conference in Malta, Kris Marszalek, the CEO of wallet service Crypto.com, explained to Bloomberg why his company chose Malta over Gibraltar, saying:
“Malta is staying in the European Union, and that’s not going to change. I went to Gibraltar a while ago and they were very open about the fact that they had no certainty about what’s coming — it doesn’t look as if anything has changed since then.”
Because Malta is firm in their position to stay in the European Union, and Gibraltar’s future status as an EU nation remains unclear, investors believe that their products will be more accessible to the EU markets if they locate themselves in Malta.
Malta may not be the Perfect Location Despite Popularity
Despite the trend for DLT and blockchain companies to move to Malta, it does have its challenges due to political concerns.
It is expected that the European Commission will be issuing formal binding demands on Malta’s financial regulator in order to reduce the amount of illicit activities occurring in the country, including money-laundering and corruption.
Although the country is thriving financially, there are signs pointing to the possibility that some of this success is the result of less-than noble actions, including selling Maltese passports to foreigners for 650,000 Euros. Opposition to the current Maltese leadership claim that the government is funneling illicit money through good causes, like cancer charities.
Jason Azzopardi, a Maltese opposition Parliament member, wrote about the potential money-laundering being done by the government, saying:
“It’s [like] thinking that prostitution is OK once part of the proceeds are donated by the pimp to charity.”
Last year, a reporter was murdered in a car bombing after reporting on governmental corruption, signaling the companies in the country could be at risk if the EU was to expel the country from the union, or mandated a leadership change.
Despite the risks of being located in Malta, tons of companies, including cryptocurrency exchanges Binance and Waves, are moving their operations to the Mediterranean island nation in hopes of avoiding the regulatory risks and constraints in many Asian and North American countries.
Malta’s Prime Minister, Joseph Muscat, has previously discussed his country’s move to be a cryptocurrency haven, saying:
“Over the last months, the Maltese government has actively solved how to position Malta as a major hub in terms of the digital economy, which will play a central role in the economic sustainability of the years to come.”
However, it is now unclear how the pending EU formal binding commands will affect the country’s leading position as the go-to cryptocurrency friendly nation.