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Negative Fall of Malta’s Cryptocurrency: 70% of firms gave up on getting licensed

It is the end of the Blockchain Island hype? Recently MFSA published the names of 57 companies that do not have expressed their intentions for fully licensed crypto and blockchain services since November 2019.

The most 'hyped' Malta's Blockchain Island dream has ended its journey, at least for the cryptocurrency companies. Around 70% of the firms who previously stated to form part of the island's legislation on virtual financial assets till now have not requested to get licensed.

From the statement coming from the Maltese financial regulator, 57 companies back in 2018, those setup shop in Malta for entering a transitory period before they could become licensed, did not express their wish for starting official licensing six months after the deadline expired.

Several industry sources had pointed out that the standards of MFSA for VGA service providers had been high. Binance, the popular cryptocurrency exchange giant who once confirmed its node to Malta's crypto dream, never requested VFA licensing and ended up setting and creating back-office activities.

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The companies were supposed to issue a letter of intent(LOI), or either send the MFSA, a cessation notice, after one year transition. But they did nothing.

MFSA now stated that entities which are not licensed are not authorised by the MFSA to provide financial services or VFA nor have they initiated the application procedure to obtain a VFA services license.

Being included in the list is the Palladium Exchange owned by the Global capital asset management firm. The company had appeared with Prime Minister Joseph Muscat at the Malta Stock Exchange to launch an initial coin offering(separate to the Global Capital).

Palladium had launched the world's first-ever initial convertible coin offering(ICCO) for raising €150 million and allowed investors to convert purchased tokens into company shares three years ago after the issue date. The main aim is to invest 50 % of proceeds into the acquisition of a controlling interest in the European bank, and another 35 % for developing a crypto exchange.

According to the Virtual Financial Assets Act, it is the regulatory regime that governs ICOs, wallet providers and cryptocurrency exchanges. Malta has 21 VFA agents and corporate service providers assisting VFA service providers. Apart from this, several other companies associated with the Maltese government were closed within 3 months of setting up.

A Malta-based cryptocurrency exchange was shut down less than a year after it was launched by a Korean company. Another Blockchain company Omnitude, that partnered with the Maltese government to enhance public transport services, ceased its operations after claiming that it was misleading on funding procedures.

Right of Reply from the MFSA

MFSA wishes to clarify that in contradiction to the impression given, blockchain usually refers to the large use of distributed ledger technology(DLT) and is certified by the Malta Digital Innovation Agency(MDIA)

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