Malta: 70% of firms applying for digital currency license ‘give up’

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Around 70% of the firms to have applied for a digital currency license in Malta have failed to secure one, according to statistics published by the country’s financial regulator.

The Malta Financial Services Agency (MFSA) published a list of some 57 companies that had applied for a license, but had failed to secure one by virtue of not completing the process by November 2019.

The stats are reflected across some 340 licensing applications received 2019. The regulator has so far failed to issue a single license under the regulations.

The licenses are governed by regulations first announced in 2018, unveiled by lawmakers to much fanfare as the most innovative regulations of their kind anywhere in the world. In support of its image as an emerging blockchain hub, the regulations were designed to encourage more businesses to operate within the new regulatory regime.

According to Leon Siegmund, a board member of Malta’s Blockchain Association, the regulations were drawn up with the wrong focus in mind: “The regulation in Malta came out of a mindset of technocracy, rent-seeking and EU-obedience. Exactly the opposite of what’s needed.”

With 340 applications received, only 26 remain active—leaving 257 with unknown status. However, the implication is that these applications have fallen at some stage of the process.

Notably, the active applications does not include digital currency exchange Binance. In February, the regulator announced that Binance was no longer active in Malta, with no licensable activity in the country.

The fresh revelations about the licensing scheme are the latest problem to hit the country, previously dubbed “Blockchain Island” for its friendly approach to blockchain and crypto businesses.

Alongside the failures of the licensing regime, the country has been beset by political scandals, including allegations of corruption and concerns over their grip on money laundering and other financial crimes.