While the International Monetary Fund (IMF), along with many first world countries, continue to express ambivalence about cryptocurrency technologies and struggle to come to grips with embracing blockchain solutions, Malta and many other developing nations are creating their own solutions to deal with potential issues.
Around most of the developed world stringent regulations have been levied on blockchain and cryptocurrency solutions, following the IMF’s highly critical report on the technologies. According to the IMF the technologies incur a high risk for potential investors and are open to fraud, scamming and use by criminals for the process of money laundering the proceeds of their crimes.
This analysis has led the EU to all but ban cryptocurrency and initial coin offerings in many of their member states. And it has led the US government to regulate ICO’s in the same manner that they regulate other securities such as bonds and stocks. Frustratingly, this approach has served only to remove most of the benefits of ICO’s while still not addressing the problems of the criminal elements (who can merely move offshore due to the decentralised nature of the technologies involved).
Despite the IMF’s critical report, several other international bodies, including the UN, have embraced the benefits of the decentralised system, using exchanges such as Ethereum to distribute funds to refugees around the world in times of humanitarian crisis.
While most refugees do not have access to bank accounts or credit and debit cards, the decentralised and technology based nature of cryptocurrencies and their exchanges makes it easy for human rights groups to either directly pay the refugees themselves or the vendors who are providing support for these vulnerable people in the time of their greatest need.
Rather than following the nanny-state route of many western nations or locking down ICO’s and blockchain technologies with endless red tape, bureaucracy and stringent regulations, Malta is employing a smarter approach to this sector. Recently three bills were passed by the Maltese Government paving the way for the government to vote to open up Malta to cryptocurrency exchanges and ICO’s while tackling in legislature the issues such as scamming and fraud which can arise through improper use of these same technologies.
Although there is still some way to go in the legislative process the Maltese government is hoping to establish a totally transparent, safe and well- regulated cryptocurrency sector when it leaves the EU in the next two years. (As a former British protectorate Malta will be leaving the European Union along with Britain once the final details of the Brexit plan are hashed out.)
Only time will tell whether or not this approach will lead to the economic rejuvenation that the Maltese government is hoping to encourage by inviting more proponents of these technologies into their state, however the early signs are promising. Already two major cryptocurrency exchanges and several industry leading companies have applied for tenders to operate in Malta with several others planning to do so in the near future. Others are making moves to shut down their Asia based exchanges and move to Malta with some companies already hiring hundreds of new staff members to help facilitate the change.
As with every new technology, the existing players only seek to preserve the status quo — slow to embrace anything new, ready to discredit that which may threaten their own market share. However, as the benefits of these new technologies become clearer and well tested, other nation states will surely follow the example of the Maltese — using smarter regulatory systems rather than tying these technologies down with ceaseless regulations and stringent penalties and disincentives.
Written by Shaun Attwood (Corporate Writer), directed by Islam Abdullah(CEO/Founder)in Ylemer.
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