Malta’s Sandbox Test of Cryptocurrency Control
Malta’s regulators are studying the possibility of regulating cryptocurrencies, early this year at the Centre for European Policy Studies (“CEPS”) Ideas Lab of 23-24th February, 2017 in Brussels.
The Prime Minister Joseph Muscat stated that: “Europe should become the “Bitcoin continent”; rather than resist the current rise of crypto-currencies; European regulators should be more innovative in how they protect consumers.”
While the users were anxiously waiting for further official action on the matter, Malta’s Financial Services Authority (“MFSA”) issued a warning on July 31st, “Notice addressed to the general public regarding virtual currencies” that in summary, announced that transactions of cryptocurreny are unregulated transactions and are not backed nor guaranteed by the Central Bank. Therefore, users must be aware of certain risks they may be exposed to, inter alia, the following: “money be lost on the exchange platform; money may be stolen from your digital wallet; you are not protected when using virtual currencies as a means of payment; the value of virtual currency can change quickly, and even drop to zero; transactions in virtual currency may be misused for criminal activities”. The MFSA, further, advised the users to exercise caution and be vigilant when dealing with virtual currencies.
The announcement confirmed the lack of regulation on cryptocurrencies and created a sentiment of discouragement in investors; however, on another set of news, on September 25th, the Times of Malta announced that Malta’s Gaming Authority would be the regulator carrying out a sandbox test to assess the threats and opportunities of cryptocurrency regulation in Malta.
This will be an important step forward for Malta and the highly expected results will either open or close the door on cryptocurrency’s opportunities in Malta. We will be attentive on the further developments of this type and keep all of our clients duly informed.
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