22 August 2019
With a reputation for low taxes and ease of business, Malta is positioning itself to become a global cryptocurrency center. Photo: Reuters
With a reputation for low taxes and ease of business, Malta is positioning itself to become a global cryptocurrency center. Photo: Reuters

Malta sets its sights on cryptocurrency dominance

Having recently visited Malta, I can tell you not many Hongkongers are familiar with the Mediterranean island. For those who follow cryptocurrencies, it might be a different story.

Following threats that cryptocurrency exchange Binance would face censure in Japan (the Securities and Futures Commission in Hong Kong has also begun to sound out warnings), the Hong Kong-based firm has announced that it is setting up sticks in Malta.

From pizza, sun, beach and beautiful scenery, it is easy to see why from a lifestyle point of view, most right-minded people would want to live there at least for a while (if you enjoy rabbit, you will be in luck – it’s a specialty). Blending richly preserved culture with natural wonders, Malta also features modern areas like Saint Julian’s, buzzing with new developments and offering plenty of opportunities for all-night partying.

The stunning fortress port capital of Valletta, once the bastion of the Knights of Saint John (a holy chivalric order originating from the Crusades), is a majestic site. Accordingly, Malta has served as a filming location for action films like Troy, mysteries including Murder on the Orient Express, and even the derided Brangelina vehicle By the Sea. Yet Malta is more than just an island resort: it’s becoming a safe harbor for all types of digital businesses.

It has already established itself as a haven for the online gaming industry, and built a reputation for low taxes and ease of business. It is little wonder that Binance founder Zhao Changpeng told Bloomberg that Malta is “very progressive when it comes to crypto and fintech”, and is reportedly close to a deal with local banks to create a fiat-to-crypto exchange in the country.

Malta’s Prime Minister Joseph Muscat extended the invitation with a rather bromantic tweet: “Welcome to #Malta @binance. We aim to be the global trailblazers in the regulation of blockchain-based businesses and the jurisdiction of quality and choice for world-class fintech companies”.

For those seeking shelter, a historical precedent: the Renaissance painter and hell-raiser Caravaggio came to the island in 1607, after being exiled from Italy for murder. There he painted the brutal Beheading of Saint John the Baptist, which still hangs in grand fashion at Valletta’s St. John’s Co-Cathedral. Already an outlaw, Caravaggio was arrested and imprisoned in Malta for yet another brawl, managing to escape the island before dying in dubious circumstances in Italy.

Malta’s reputation for housing lawless elements has not entirely left the island. Its online gaming industry, including sports betting, web-based casinos, poker and other games, has been subject to claims of lax banking regulation and money laundering.

Outside St. John’s Co-Cathedral, at the Great Siege Monument opposite the Law Courts in Valletta, is a memorial to murdered Maltese journalist Daphne Caruana Galizia, killed in a 2017 car bomb explosion for her investigations into corruption, nepotism, organized crime, and money laundering. Her popularity for speaking justice to power, including a key role in the Panama Papers revelations, should forebode.

For the cryptocurrency industry, which has been beset with issues surrounding its connections to criminality, public relations management and transparency will be critical. While enjoying a place in the sun, cryptocurrency players seeking this new home would be wise to ramp up their due diligence and demonstrate their commitment to clean business practices.

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