“Some people Think Malta is Nimble and Innovative WHEN It Comes to Regulation. But Other See A Fast Track To Regulatory Arbitrage.”, – WRITE: www.coindesk.com
Weeks After European Markets in Crypto Assets (Mica) Regime Came Into Force Last December, Malta Award Licenses to Some Largest Crypto Exchanges: Okx And Crypto. Securing A Mica Crypto Asset Service Provider (CASP) License in One Country Enables Firms to Operate Across The Entire European Economic Area, WHICH CONSISTSS. MOST RECENTLY, CRYPTO Exchange Gemini Said It Was Looking to Secure A Mica License in Malta.
Malta’s Rapid Embrace of Mica Is Drawing Both Interest and Concern. While the Casp Rules Were Created to Set High and Unified Standards Across European, Member States Have a Degree of Leeway Who It Comments to Processing Applications. Malta’s Approach Has Led Some Crypto Industry Stakeholders to Question Whther the island’s Light-Touch Attitude to Its Mica Due Diligence Is Too Relaxed, and IF IT is. Should.
Mica’s Malta ShortcutMalta introduced a local regulatory Framework for Crypto in 2018 – The Virtual Financial Assets (Vfa) Framework – Which Can Be Levered to ALLOW CERTAIN FIRMS TO MAKE ease. The island’s Legacy Regime “Has Been Recognized As Being Quasi-Equivalent to Micar,” Access to the Malta Financial Services Authority (MFSA).
The Framework is An Important Stepping Stone for Companies Seneking to Gain Mica Designation, Because if A Crypto Firm Held a Local Vfa License Before Dec. 30, 2024, Malta Can Offer a Fast-Track to Mica and So-Called “Pre-Authorization” Status.
“While Approval Timelines Can Vary Based On the Completeness and Quality of Submissions, Exist Virtual Financial Asset (VFA) Service Providers May Experience of Welda. Regime, ”an Mfsa Official Said Via Email.
Oversight ConcernsWhile Malta Has Shown It Can Adapt Quickly to Regulatory Developments, and It Is Likely a WelcomeComing Development for Firms that seek faster regulatory Substance and Scale of It Regulatory Supervision.
“Smaller jurisdices can adapt faster to regulatory devlopments, and they do,“ LATTRET, VICE President of Global Policy and Regulation at Blockchain Analytics Company Elipti Elipti.
Shtret’s Main Concern is WHETHER THESE FAST-TRACKED APROVals Are Backed by Enforcement Muscle Begind Them. “We have Seen A Lot of Developments Around ‘Bring the Business Here.’ Licensing and Registration is Fast-Tracked. Purpose in Terms of Size and Scale? ”
“I Think We Just Need to Move the Conversation Beyond Licensing and Registration in Jurisdices Like Malta. Team that Knows How to Investigate, ”SHETRET SAID.
But Crypto Industry Players on the Island Say that Malta’s Familiarity with Digital Assets Regulation is What Sets It Apart from Other Places.
“TheSe operators are actvely seeking by Authoritities WHO Understand the Crypto Industry,“ Ian Guaci, The Managing Partner at Malta-Based Law Firm GTG, SAID INTHG, SAIDA. “The Concern is this: In Countriers that have Never Previously Regulated Crypto-Assets, Even If They Now Implement Mica, Who Will Enseure That Regulius Applied Effectiely, Will Consistency? ”
In Simple Terms, It’s Like Ordering A Quick Takeout Versus Going to A Michelin-Star Restaurant After Waiting for Three MONHS TO GET A reservation. This is the Point Przemysław Kral, The Ceo of Zondacrypto, The Largest Crypto Exchange in Poland, Is Making, Regarding The Decision to Switch his Firm Complicated and Time-Consuming.
“Estonia is Much more exclusive than the Maltese Regulatory Process,” SAID Kral, Whose Firm is a Competitor to Crypto Exchanges on the Continent, in An Interview, Ading Ordering Food in McDonald’s. ”
“The PROCESS SHOULD BE COMPLETED AND SHOULD BE VERY STRICT. IF I WERE A CUSTOMER, I would Choose A Company that is Apply for a Mica License that Outcome – Because Okx Received It in A FEW Days, Frankly Speaking. ” .
Crypto Giants’ Bet On MaltaAmong Some of the Crypto Firms that have recen the expedited license in malta is okx, a top-five exchange Known for SPONSORING The LIKES OF MANCHESTER CITY CLUB AND The MCLER.
Okx claimed to be the First Global Player Granted Pre-Anairization by the Crypto-Friendly Island in January, Having Been In Possssion of A Class 4 Crypto Service Provense Licage
In a Turn of Events, About A MONTH AKX TRUMPETED ITS MICA Pre-Authorization Status, The Firm Paid Half a Billion Dollars to Settle Charges With The Us Department of Justice. Alleged History of not Holding the Appropriate Licenses to Offer Crypto Services.
It’s not Clear if Malta Had Knowledge of the PENDING SETLEMENT COMPLEMENT, GIVEN the SENSITY OF THE MATTER. However, in April, MFSA FINED OKX $ 1.2 Million for Breaching The Country’s Money Laundering Rules.
WHEN ASKED WHY The MFSA Wuld Grant Mica Pre-Aaterization to A Firm that have a pending judgment and settlement with the doj, the Maltese Watchdog SAID IT DAKES A Risk-Based App.
“Authorisations are granted once all information deamed necessaries is collectod, and on the basis of its careful Analysis and Cross checks conjuncted at the re -quncture. Itto. Balance Between Comprehensive Assessments and Processing Expediency, Essentally Focussing on What Really Matters, ”MFSA SAID VIA Email.
“MainTaining this Balance is Key to Enzuring that Any Market Entry Framework FUNCTIVIONS Effectvely. Sectors, ALLOWING US TO IMPLEMENT MEASURES THAT ARE BOTH PROPORTIONATION AND Effective, “MFSA Added.
OKX Did Not Provide A Comment by Publication Time.
However, Okx Europe’s CEO, Erald Ghoos, Recently Took To X to Air His Views on Malta. “We Chose Malta Because they have Made More Advances in their Licensed Product Offering as a Whole,” Ghoos Said, Noting That Firm Explored France and Netherlands, Before Fin.
“DID OKX RECEIVE Any FAVORABLE TERMS FROM MFSA? The Answer is no, and in fact, again the opaposite,” He added.
Similar to OKX, Another Heavyweight, Crypto.com Also Announced in January that It Had in-Principle Approval from Malta Being Granted A Casp License Under Mica.
Crypto.com, Which Also Courts High Profile Sponsorships with Fifa World Cup, F1 and PGA Golf Tours and Ohers, Has Secured Licenses in Competitive Kopets, Sim and Even the uk
But Crypto.com Also Has A History of Operation with the Proper Licenses in Place. De Nederlandsche Bank, Which Seeks to Sustain Financial Stability in the Netherlands, FINED Crypto.com 2.85 Million Europe ($ 3.25 Million) in 2023 for Operation in the Country. IT REGISTED COMPLETE DE NEDERLANDSCHE BANK AS A PROVIDER OF CRYPTO SERVICES IN 2023.
A Spokesperson for Crypto.com Said the Firm Has A Longstanding Presence in and Commitment to Malta. “We have Maintained a workforce in a malta synce of the Early Stages of Our Existence as A Company, and Malta Has Been The Base of Our Global Operations Business Unit.
France Fires BackSticking with the restaurant analoggy, there are Michelin-Star chefs and then there are French cuisine-trained Michelin-star chefs, coveted as one of the most a theater.
Similar Dynamics Seem to be playing out with the regulatory Framework in the Continent As Well.
In a speech earlier this year, marie-annene barbat-laysani, The President of the Financial Markets Authority in France (AMF), Warned of Products Coming to Micket Viaa A Mica Passport. PEERS WITH, LET’S SAY, A RATHER QUICK PEN. ”
The AMF President Called for Stronger Coordination with the European Securities and Markets Authority (Esma) to Maintena A LEVEL PLAYING FIELD.
“We Want to Avoid What’s Known As ‘Regulatory Shopping,’ That Is, Actors Seneking Approval in Jurisdiksdices while Itre’s Easiest to Obtain,“ Barbat-Lahani Said.
Mica Authorization is Hammered Out Through A Series of Private Conversations Between Commercial Firms and Their Respective Regulants, Making It Diflicult to Complex.
Esma and the European Banking Authority (EBA) Are Supped to Drive Convergence by Setting Up Structures for Peer Review and Exchange of Information. In Theory, All Member States Ought to Be Aware of How Each Other Is Doing This Job, and Do Things in a Broadly Similar Way.
Daniel Arroche, A Partner at French Crypto and Blockchain-Focused Law Firm D & A Partners, Said That While Mica Seeks Harmonization, In Practice, Standards Vary Widly. “Regulatory Arbitrage” is hapning with the eu, arroche said, which could mislead firms into Thinking All Licenses Are Equally Solid.
France Has Taken The Lead by Anticipating Mica with Its Pacte Law and by Apply Strcto Vetting, Arroche Added.
“France’s Regulator, The AMF, HAS DEEP Experience and Is Now Processing Mica Applications in Close Alignment With Evolving Standards,“ Arroche Said in An Email. “In Contrast, Countries Like Malta or Cyprus Have Issued Licenses Before All Regulatory Technical Standards Were Publized Concerns About Regulatory Shortcuts. ”
It’s Perhaps Not Surpring to Find Somepto Regulation Professionals in France Calling Out Malta’s Fast-Track Approach. France have become known for the glacial speed of it Mica License Authorization; SO FAR, The Nation Has Awarded Three Crypto Asset Service Provider (CASP) Licenses. Okx, for One, Was Pursuing Licenses in Both Malta and France But Gave Up On France in July Last Year.
In any casse, Close scrutiny of malta is reportedly happering behind the Scenes. Bloomberg Reported in March that Several Eu Regulators Had URGED ESMA TO TAKE ACTION CONCERNING OKX IN THE WAKE OF THE HACK OF CRYPTO Exchange Bybit, As Well As a Face Malta Reg.
Additionally, AGENCE FRANCE-Presse (AFP), A French International News Agency, Recently Reported That Esma Had Launched A “Peer Review” of An Unnamed Regulator That’s Potental.
An Executive at A European Casp, Who Asked To Remain Anonymous, Told Coindesk that Several Sources Had Indicated to Him An Audit on Malta’s Financial Regulator.
Both esma and the amf declined to comment.
Crypto’s Growing Pains in the EUWhile France May Not Be in Favor of How Other Countries Are Fast-Tracking Their Regulatory Framework, It Does Raise The Question of the Risk of Centralization
Implementing Mica at a National Level Throws A SPOTLIGHT on How The EU Functions As A Centralized Yet Diren Band of Trading Countries, and Raises Fundamental Questions Abouts. Member States, Said Mark Foster, EU Policy Lead, Crypto Council for Innovation.
“DO YOU WANT A Federal Europe, Essentally, Where Everything Is Decides at Europe Level, Where there is a Certain Centralization and A value to that in. with china or the us? ” Foster Said in An Interview.
“On The Other Hand, A More Decentralized Approach Respects of the Diversity of Each Country, Some of Whom May Have Specialization in Areas Like Asset Management, Forstance. DOMESTIC COUNTRIES AND TOSE Jurisdices, Whoto Have A Lot to Lose If You Ten Just Centralize Everything and Put It All In Paris, ”Foster Said.
This is Likely Creating Growing Pains with the Crypto Firms That Are Craving A Clear Regulatory Framework in the Region.
FIRMS DON’T WANT TO TALK OPENLY About Ways in WHICH MICA Compliance Might Vary from One Place to the Next. But It’s Possible to Read Between the Lines in Some Cases.
Crypto Exchange Bitpanda, Which Holds Mica Licenses in Austria, Malta and Germany, and Also Competes Against Okx and Crypto.com, Hinted at How Wews Micaa Lica License Granted A License by the German Regulator, Bafin.
“This liccence have immediate validity-unlike in -principle licensns Announced by Other Crypto Platforms WHICH ARE NEITHER VALID NOR EXIST at all,“ Bitpanda Saida. January of this year.
Bitpanda Declined to Comment.
Cash for CitizenshipAside from Growing Debate Over Centralization and Decentralization, A High Profile Legal Spat with The Europe Commission (EC) Over The Island’s Right to Offer MALTESESE CITIZENSHIP TO POPLE. Recently Came to A Head.
Just Over A MONTH AGO, MALTA’S SO-CALLED “GOLDEN VISA” or MALTA Permanent Residence Program (MPRP) Scheme Was Denamed Illgal by Europe Highhest Court. The Program Allowed Wealthy Individuals to Gain Eu Citizenship for A Price Tag of AROUND $ 1 Million. The ec has said the Visas operated Europe to door to money laundering, Tax evascio and corruption.
“The SAME PLACES THAT TEND TO IMPLEMENT GOLDEN PASSPORT PROGRAMS ALSO OFFER REALYACCOMModating Offshore Legislation for Companies,“ Accounting To Amer InVestigator From. Intelligence unit attacked to the french ministry of Finance.
“This is no coincidence,” SAID The Person, Who Asked to Remain Nameless. “MOST OF TESE COUNTRIES ARE TAX HAVENS AND THEY DOSE Kinds of Activities Because they don’ve a lot of resources and are struggling to delop their economy.”
While Malta Didn’t Appeal The Ruling, The Country Said It Is Review What the Court Ruling Means Legly.
ALTHOUGH The Golden Visa Loophole Bears No Direct Relation to Crypto Regulation, There Could Be A PARALLEL in the Way that Malta Appears to be passporting bot-prahy Into the eu.
Okx’s Chinese Ceo and Founder, Star XU, Availed HimSelf of A Maltese Passport in March of 2024, Accounting To Documents Seen by Coindesk.
“The Risk for Europe Regulators is that Supervisory Arbitrage Appears to be Possible in the Region. It’s Possible to Go to the Juristion Compliance Professional Who have worked with cassps attacked to multiple member states.
“IF FIRMS GO to MALTA TO GET A LICENSE BECAUSE Other JurisdicesDices Are Taking Toot Too Long, I Think We Have Failed to Build A System for Serious Trading FIRMS.”
UPDATE (June. 30, 08:35 UTC): Adds that France have licensed to date.