Malta’s Trust With Blockchain Could Spell Trouble: IMF

We know that Malta has become the “blockchain island” of Europe but could its staggering success possibly pose a threat? The International Monetary Fund or IMF thinks so, as a mission from the premier financial body said that the fast development of blockchain technology in Malta can possibly cause potential risks of terror financing and money laundering in the country. A local news outlet reported the IMF statement recently.

The report suggests that an IMF mission had recently paid a visit to the small island country and outlined some of the sectors that seemed to pose a risk of money laundering and other related criminal activities.

Besides blockchain, the national government’s citizenship-by-investment scheme and the financial and remote gaming sectors have also been identified as likely threats.

Malta has been a prime destination for blockchain firms and enthusiasts for a while now, given the country’s conducive regulatory environment. In fact, the parliament of Malta has even passed three bills dealing with blockchain tech and cryptocurrencies to give further impetus to the development of these two interrelated industries within the country.

The successful incubation of blockchain-based projects in the country has put this little country on the map for all tech enthusiasts.

Malta’s tryst with blockchain has met with considerable successes so far, with the OK Group even deciding to start the first ever blockchain bank in this country in December, 2018, proving that Malta’s suitability with regard to blockchain technology was considerable.

In fact, what Mr. Tim Byun of the OK Group had to say stood testament to the country’s expertise in incubating blockchain developments. He had said:

“Malta has been a first mover to comprehensively regulate the blockchain industry, and we are excited to be involved in this new banking venture with RnF Finance Limited. Malta’s sound regulatory framework and support for new industries will cultivate many more opportunities on Blockchain Island.”

In fact , the country’s prime minister himself has played a great role in encouraging blockchain and crypto proliferation in the country. Joseph Muscat, the PM, has repeatedly emphasised on the multitude of benefits blockchain technology can yield across a wide range of use cases.

However, now the IMF’s new warning comes as a bit of a dampener. The body warned the “block island” to be more vigilant with regard to bringing blockchain and crypto players within the ambit of AML (anti money laundering) standards to guard against possible instances of criminal activity.

The government has been advised to adopt a stronger role in controlling the downsides of this flourishing sector so that blockchain can continue to grow without posing a risk to its economy.

The mission warned:

“The increasing number of financial entities under supervision, the rapid development of new products, the evolving regulatory environment and the tightening of the labour market have put the Malta Financial Services Authority under considerable strain.”

It is clear that the IMF officials are quite insistent that Malta’s government should temper its enthusiasm for blockchain with a little more prudence. Will Malta comply? Only time will tell.