Malta’s financial regulator has issued a warning with the intention of preventing the adoption of digital currency use after the country installed its first bitcoin ATM.
At the end of July, it was reported that Malta had installed a bitcoin ATM in the town of Sliema where it is operated by Venture Trading. One of its services will be to convert bitcoin to euros.
The installation of the machine marked a significant step for the island nation. Local startup Ivaja, who introduced the machine to Malta, is focused on making the country a ‘Bitcoin Island.’
According to the startup, though, many feel that Malta is not ready for bitcoin and too far behind in the race.
Now, it seems that the country’s financial regulator doesn’t approve of the bitcoin ATM. After Malta’s first digital currency ATM received so much coverage, the Malta Financial Services Authority (MFSA) issued a warning to potential users.
Unlike traditional money, acceptance of payment in virtual currency depends entirely on the voluntary consent of the recipient. Furthermore providers of services in relation to virtual currencies are currently neither regulated by law nor authorised by the MFSA.
However, if users do use the digital currency, the MFSA added that potential users should proceed with caution when using a digital wallet as they would with a traditional one.
You should not keep large amounts of money in it and ensure you keep it safe and secure. You should also familiarise yourself with the ownership, reputability, transparency and public perception of the exchange platforms that you are considering using.
This will, no doubt, confuse many people in Malta who are interested in the digital currency market. Not only that, but the MFSA’s warning is in stark contradiction to Joseph Muscat, Malta’s prime minister.
In his opinion, the country ‘must be on the frontline in embracing this crucial innovation’ and that they can’t simply wait for others to proceed before copying them.
Speaking at a conference organised by the financial affairs parliamentary committee, he added:
“This is not just about bitcoin, and I also look forward to seeing blockchain technology implemented in the lands registry and the national health registries. Malta can be a global trail-blazer in this regard.”
Supportive of the digital currency, Muscat has even called on EU leaders to embrace bitcoin.
He points out by saying:
“My point is that rather than resist, European regulators should innovate and create mechanisms in which to regulate cryptocurrencies, in order to harness their potential and better protect consumers, while making Europe the natural home of innovators.”
Malta Unveils Plans to Embrace the Blockchain
Just after the announcement of Malta’s first bitcoin ATM, the government announced that it had started unveiling its plans of making Malta become one of the first countries to embrace the blockchain and bitcoin at casinos.
According to Silvio Schembri, MP for the Labour Party, the country will become an international hub for the technology.
“We’ve heard enough about the opportunities posed by blockchain and it’s now time to put words into action to create new opportunities for both citizens and the economy. It’s my priority to turn this vision into a reality.”
Schembri claims that similar to the Malta Gaming Authority (MGA), which regulates and hands out licenses to the gaming industry, there will be a new industry that regulates the blockchain sector in Malta.
“There are many of these companies out there who are itching to have a proper licence under which to operate, and we could be the first in Europe – if not the world – to provide them. Some oil companies are interested in shifting to blockchain – can you imagine how much money we can earn through taxation if they register in Malta?”
With such a proactive interest in bitcoin and the blockchain, it’s clear that Malta knows what it must do to push the country forward in a way that will allow it to maintain pace with other countries in similar fields.
The MFSA Hampers Innovation
Unsurprisingly, after the MFSA’s announcement some have come out to claim that the financial regulator’s warning is no longer ‘justified.’
BitMalta, a Maltese bitcoin and virtual currency advocacy group, said:
“[The warning] would have been justified five years ago in view of the yet-uncertain nature and effect of cryptocurrencies, but not in this day and age when jurisdictions worldwide are readying themselves for acceptance of cryptocurrencies rather than shying away from this technological revolution.”
“We are extremely disappointed, to say the least, that whereas Malta’s Prime Minister Dr. Joseph Muscat and Hon. Silvio Schembri, the Parliamentary Secretary for Financial Services, Digital Economy and Innovation, are actively advocating the adoption of blockchain technologies and cryptocurrencies in Malta, the MFSA stubbornly choose to ignore developments in the area and quote long-since settled risks pertinent to cryptocurrencies.”
According to BitMalta, the blockchain is the ‘next big thing,’ and that it will echo the disruption that the Internet created in the late 90s.
“It is therefore of utmost importance to create incubators for such thriving projects to grow unmolested and study them closely, and this ostrich-in-the-sand approach adopted by the MFSA is anything but proactive.”
Rather than scaring the public on a topic that they may know little about, BitMalta suggests taking measures to educate the public, claiming that digital currencies are here to stay ‘whether you ban them or not.’
It remains to be seen what impact, if any, this has on bitcoin adoption in Malta. It’s hoped, though, that with more understanding of the market the financial regulator will become open-minded of it.
The digital market, and in particular bitcoin, doesn’t appear to see waning support anytime soon. So rather than tarring it with a negative brush, why not research more into it. By doing so, those who are against it may find out that it’s not so scary after all, but a viable way for people to reclaim their financial freedom back.
Featured image from Shutterstock.