The tiny island of Malta has big dreams as a bitcoin haven

Published: 2018-12-28

 

When the prime minister of Malta, a tiny island nation in the Mediterranean, addresses the United Nations, the world rarely stops to listen. But Prime Minister Joseph Muscat?s speech in September broke some new ground. We are currently in exciting technological times. This is why in Malta we have launched ourselves as the blockchain island by being the first jurisdiction worldwide to regulate this new technology that previously existed in a legal vacuum.

We traveled to Malta to see this ?blockchain island? and were amazed by its beauty. A speck in the Mediterranean between Europe and Africa, Malta is one of the smallest countries in the world, with a population of less than half a million. For almost five hundred years, the only thing that resembled crypto here was the crypt of St. Agatha, a virgin martyr who died in a Roman prison in the year 251. Today, however, there are dozens, and perhaps hundreds, of crypto businesses on the island. But we were wondering how aware the local Maltese are of their country?s new crypto and blockchain identity.

We figured that, if anyone would know, it would be students at the university, one of the oldest in Europe. Blockchain island? NO NO NO NO NO NO I don't know anything about it. No I haven't I don't think so. No no I think most of us don't know about that. I might be mistaken. Personally, I didn't know about this. So I think we need more awareness about it especially if it's growing. So is Malta really a ?blockchain island?? If so, why does it want to become one? Let?s take a closer look. Malta has a very exciting history. First it was colonized by the Phoenicians in 700BC. Then came the Romans in 218 BC, followed by the Byzantines, Aghlabids, the Norman Kingdom of Sicily, Order of St. John, The French and finally Britain which colonized the island until 1964, when Malta finally gained its independence. To grow its economy, Malta has always been innovative.

In the early 2000s, it passed legislation that allowed it to host online gambling companies, which turned out to be a success, now accounting for 12 percent of Malta?s gross national product. So it does make sense for Malta to welcome another new technology -- crypto and blockchain. We could tell this is going to be revolutionary. And Malta because we don't have natural resources - whatever idea we are ready to listen and grab an opportunity and run with it. But the turn into reality into implementation in such a short time - small countries like Malta are able to do it. We don't wait for tomorrow, we just try to do it today.

Malta has leaped into the business of hosting crypto conferences. These events, largely supported by the government, attract major crowds. The recent Blockchain Summit drew almost four thousand people, a number close to one percent of the total population of the country. What we really love about Malta is it provides a balanced and robust regulatory framework. The second group that's very important are the regulators because they need to enforce and implement those laws and regulations.

In November, 2018, Malta became the first country in the world to introduce 360-degree crypto regulation. For engineers, by engineers. Other laws protect investors by regulating crypto service operators, exchanges, and ICOs. Crypto advocates welcome this, although some point out the irony of a government supporting a currency that is designed to be independent of all governments. I think it's great. I think it's absolutely fantastic. But in the long run it's meaningless and for this simple reason: Again, if we use cryptocurrency for its intended purpose and if distributed exchanges come along what does it mean to be crypto friendly? Who cares. Because whatever legislation is you wish to enact or not enact cannot be enforced.

So in the short term that's great. We get support from the government, we get some validity, we get exposure, people feel secure in it, but in the long run - we will have control from no one, no government and all of the welcoming arms in the world mean nothing when your welcome anyway. Meanwhile, right now, crypto businesses are happy to be welcomed by Malta. It has received more than one thousand applications from crypto companies attracted by the new regulations, the ease of registering a business in Malta, and a lucrative tax refund mechanism that can lower the nominal 35 percent corporate tax rate to as little as 5 percent, the lowest in the E.U. One blockchain startup that decided to make Malta its home is chiliZ. Its business is tokenizing sports teams like Juventus. It is also betting on Malta?s future as a crypto capital by building a so-called ?blockchain campus.?

We developed this campus in Malta because we believed that there would be a lot of companies that's going to need help and resources to help setting up their operation here, and for us because we're based here it's good for our company for Chiliz for a couple of reasons: One - is gonna help us to be like at the epicenter of the ecosystem here in Malta. And it will also help us to grow our name and become more like an authority globally in the blockchain space.

The blockchain campus is intended to host up to fifty companies, law offices, VC firms, and even ordinary hodlers. They will pay for their spaces with chiliZ tokens and have access to a network of incubators in locations as widespread as Tokyo, Singapore, Berlin, Tel Aviv, and Paris. Malta has been at the forefront of many regulation in the last 15-20 years. And because they're all European countries so whatever you do here in a regulated way you can provide your services in the rest of Europe. Right now if you create a blockchain or crypto company there is some countries that will shut down your business from one day or another. Here you know you are welcome, the prime minister is welcoming you, the president is welcoming you. And these are not just words.

We were invited to a private event hosted by Binance and the president of Malta at San Anton Palace, the president?s official residence. We were the only media company that was invited. So good evening and welcome to San Anton Palace and welcome to Blockchain Island! -Why are you wearing a Binance shirt? -It is a Binance event! -Is it true that Binance is going to announce its office tonight? -No comment! How many of you have ever attended a blockchain event at a presidential palace? I think this is the first one in the world. I think Binance got really lucky, and I think as an industry we got very very lucky with Malta.

Malta came at a time when regulatory clarity was very much needed. We needed government to support our industry and Malta took that lead. So let?s give a lot of applause! It?s not just the business. I have to know that this new technology will be a whole revolution of how humanity will We need to be one human family for each and every one of us, to be successful in whatever we are doing. Thank you and enjoy the evening! I first came to Malta in January this year, when I met with the regulators here they were already very very knowledgeable on a blockchain industry. They understood it completely. Not only the technology, they also understood the potential impact both technology wise financial wise economically. They understood everything and they already had a draft legislation before I even talked to them, they presented that to us for review and for comments. And I was like: wow that's fantastic! Malta?s attitude toward crypto -- and to new technology and business in general -- is paying off big.

Its economy is growing at an unprecedented rate of 6.6 percent. For the last three years, it has been the fastest growing economy in the EU and one of the fastest in the world. Decades of budget deficits finally changed to a surplus two years ago. The economic growth in Malta is so high it would have hit a ceiling long time ago just like Luxembourg, if we were to rely on the Maltese labour force. We realize and the government makes it very obvious with the people and tells them look, it's a deal: if you really want to grow and your standard of living you want to increase it for you and for your children you have to have people coming from abroad. Now they are make up 20% of our labour force and this growing. And people do come from abroad. Some of them come to work in the new businesses. Others pay to become citizens of Malta. The country has collected 600 million euros through a controversial ?immigration by investment? program, enabling foreigners to buy Maltese passports.

So, hodlers, if all this has made you want to be Maltese, save up a million euros -- or 340 bitcoins. Be aware, however, that your new home is not perfect. A history of lax regulation, low tax rates, and the cash-for-citizenship program have not attracted only good guys. Like every industry, blockchain industry and cryptocurrency industry probably has some actors who are perhaps not as honest as you and I might be or others should be. But I do think Malta needs to be a little bit cautious about this because it's put up the banner to say Maltese open for business for cryptocurrency and for blockchain and is promoting itself as a blockchain island. And what I'm looking for I think as the next step is to see the VFA and the MFSA come into it put some legislation in place to show how operationally there can be safeguards to at least make sure that the actors that are coming in are deploying good tools that for example allow solid KYC, AML So know your clients and the anti-money laundering laws to be put in place and those checks and balances to be present, using tools that are appropriate for this new industry.

Bitcoin, digital assets it's still an experiment. I'm confident that it's going to go far. It's not going to disappear overnight. A question that I just had on the panel whether blockchain in Malta is a fad that's just going to evaporate. I don't think so. It's going to be here to grow and become hopefully a budding industry for Malta. Of course nobody knows where the future will take you. But is the approach that you, rather than you know put up your nose so to speak and think that's it's you know only for kids. We don't do that. We take things seriously. We hate bureaucracy here. And we respect the private sector and their ideas. And that's the future. That's where our future lies. So, will Malta really become a blockchain island? It is off to a fast start. Its formula of ?regulation first? seems to be working. Capital, start-ups, and talent are leaving less friendly jurisdictions to come to a place that welcomes them. Clear legislation, low taxes, and an open-minded government make for a stable and healthy crypto environment. The warm weather is just a nice plus.

 

Filed Under: Blockchain