Businesses associated with blockchain find difficulty in opening bank accounts in Malta
● PS Silvio Schembri previously expressed confidence government regulation will address banking concerns on blockchain companies
Businesses associated with blockchain technology are finding difficulty in opening bank accounts in Malta, industry sources say.
The Malta Independent received information from sources within this new and innovative industry about how businesses associated with Blockchain technology are finding it extremely difficult to open up bank accounts in Malta, an important component of relocating a business to the island.
When taking the information to individual businesses to confirm what the industry sources have been saying, none were forthcoming with replies at the time of writing.
Despite not receiving the replies, this newsroom took such concerns to the relevant government junior minister, asking him about his views on the strict regulatory environment with which businesses are operating in within the EU.
Professionals within the financial services industry have even remarked that the length of time to have financial transactions approved and accounts set up for clients who run businesses in more traditional areas are being met with lengthy and costly delays, let alone those seeking to operate within the blockchain and cryptocurrency spheres.
Parliamentary Secretary for the Digital Economy Silvio Schembri “strongly believes” once new laws surrounding Blockchain technology and cryptocurrency are enacted in Malta, banks would be less reluctant to welcome companies working in the industry, presumably due to the legal certainty it would provide.
“I understand that nowadays we are operating within an environment that is not regulated [referring to Blockchain and crypto-currencies]. I can understand the reluctance of banks not to open up accounts in this type of industry. I strongly believe that once these laws will be enacted, this will answer a lot of questions especially when it comes to Anti MoneyLaundering and KYC issues.
“I can understand today’s situation, without these Bills we have these questions unanswered, but I think these bills will answer those questions.”
Parliament is set to discuss three Bills presented by government: the Malta Digital Innovation Authority Bill, the Technology Arrangements and Services Bill and the Virtual Financial Assets Bill will be presented to Parliament for its first reading this evening in Parliament (Tuesday).
The Bills are to provide legal certainty for both businesses and individuals looking to plug into the world of Distributed Ledger Technology such as Blockchain as well as cryptocurrencies in a currently unregulated market.
Trijo, a crypto currency news website picked up on remarks made by an individual on the popular closed Facebook group Bitcoin Malta where he called for the situation of companies associated with Blockchain and Maltese banks to be addressed. He stressed that it is “useless having bills, laws and regulations if you continually hear clients saying ‘we can’t get a damn bank account in Malta, how can we operate?”.
Malta is being touted by the government as becoming the blockchain island.
The man who penned the comment is involved in a company which deals in blockchain related services.
When speaking to people within the blockchain industry, most express their frustration at blockchain being automatically regarded in the same basket as crypto currencies. While it is true that crypto currencies such as the famous Bitcoin is underpinned through blockchain technology, the two elements are used for very different purposes. Blockchain is a kind of technology used to store data. The transactions on Bitcoin are stored on a distributed ledger called the blockchain.
Crypto currencies are a form of tokens which have a value in and of themselves, which is traded on crypto exchanges, stored in wallets and in a growing number of cases used as a form of payment.
Blockchain technology, a form of Distributed Ledger Technologies (DLTs) deal in data and its uses may relate to a wide number of issues that are separate from crypto currencies. DLTs take away the need for a middleman as it is a transparent way of handling vast amounts of records and information minimising the chance of tampering or manipulation because of the way it is designed.
While crypto currencies have been subject to much negative media due to its vulnerabilities at this stage of its life, many industry insiders urge further education into blockchain technology and its importance which can be separated from the crypto world.
Bank of Valletta, which last year banned private account users from purchasing crypto currency, was quoted telling a local newspaper that currently it does not have the risk appetite to enter this sphere.
In the Bitcoin Malta social media post by the individual, PS Silvio Schembri remarked that this is a chicken and egg situation.