MALTA: ‘Premature’ for minister to pin greylisting on crypto, expert says.

As published on maltatoday.com.mt, Friday 25 June, 2021.

A cryptocurrency expert has called out government for changing its stance on the sector after Finance Minister Clyde Caruana said this was one of the main reasons behind Malta’s greylisting.

Speaking on Xtra on Thursday, Caruana said concerns were raised over the volume of certain transactions in the past, which may have been used to finance terrorism and other major crimes.

But crypto expert Jonathan Galea said it was “premature” for the minister to make public comments on the issue, when the Financial Action Task Force’s findings had not been published yet.

He also said claims that Malta processed “billions” in crypto transactions was highly unlikely.

Galea, who is managing director of Blockchain Advisory Ltd, used crypto firm Binance to illustrate his argument. "Binance has two companies in Malta - Binance Europe Services Ltd, and Binance Marketing Services Ltd. The two companies, over the years 2018 and 2019, generated a total of around €600,000 in revenue - this is all publicly available information on the Malta Business Registry. The global Binance group, throughout the years 2018 and 2019, generated well over USD2 billion in revenue; the revenues declared by their Maltese companies only amount to around 0.03% of the total."

He said Estonia, which has formally approved the setting up of over 1,500 crypto companies, and then consequently revoked over 1,000 of the crypto licenses given out by its Financial Intelligence Unit because of concerns over money laundering, eclipsed Malta by a huge margin when it comes to allowing crypto companies allowed to operate within its jurisdiction.

“Surely, if the FATF was concerned about crypto companies being a funnel of money laundering, they would have clamped down on Estonia first and foremost; yet, as everyone can see, it is Malta that has been greylisted, not Estonia,” he said.

Galea also pointed out that it is still very difficult for crypto companies to operate effectively in Malta.

“No local SEPA bank will entertain the opening of accounts for such companies, due to their fear of losing ties with corresponding banks – while such corresponding banks directly open accounts to crypto companies, funnily enough,” he said.

Caruana went on to say that Malta’s Virtual Financial Assets Act, which was approved unanimously by both sides of the House in 2018, is so stringent that no crypto company decided to base its headquarters in Malta, and instead simply opened a subsidiary which handle a fraction of the total exchange’s volume.

“The constant feedback that we receive from the international industry is that Malta has regulated the crypto sector to the highest possible standards, and we received this feedback from other regulatory authorities and experts too,” Galea said.

Galea said government’s attitude in the last few days suggests it will not support the crypto industry any longer.

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