According to a recent report by the Financial Action Task Force (FATF), a regional regulatory body, the Maltese government has allowed the crypto industry to adopt a lax attitude toward regulations.
The FATF alleges that more than $70 billion in crypto transactions have moved through Malta, and some of these transactions may not have been subject to sufficient oversight.
However, the data set that the FATF used to establish its allegations is suspicious.
No firm dates were given for when the money is thought to have moved in and out of Malta’s crypto industry. In addition, very little information about why there may be a lack of oversight has been made public.
There is, without any doubt, a huge blockchain presence in Malta.
Malta is home to Ledger Projects, Stasis, Bitmalta, Okex, Coinvest, Decentralised Ventures, Yovo, as well as the Blockchain Malta Association. Many of these companies haven’t applied to be regulated, and the ones that have applied haven’t been approved according to local media.
Malta isn’t the Problem
While it is common to allege that cryptos are widely used in illegal transactions, actual studies by major international bodies show that when compared to cash and the existing fiat financial system, there is little to no illegal activity in the crypto industry.
There is no doubt that cryptos can be used in connection with crimes – for example in ransomware attacks, however because major tokens like Bitcoin are often the payment options of choice – it is actually pretty simple to track down any major beneficiaries of an attack.
What many people – especially regulators and politicians – don’t understand is that most major cryptos aren’t that private.
A person’s identity on the Bitcoin network may be difficult to figure out unless you have the cooperation of some tech savvy investigators, but in reality, if a crime is committed and Bitcoin is involved, it is pretty hard to hide the ill gotten gains.
The sad fact is that most people don’t know much about Bitcoin, or that the entire blockchain is freely open to inspection by anyone who has the skills.
Politicians play on this ignorance, and are able to divert attention from the fact that the fiat financial system is a cesspool, and that it is the most popular way to move around dirty money.
Cash is also a great way to hide transactions, but it probably isn’t going anywhere, anytime soon.
A Drop in the Ocean
It is difficult to assert that the Maltese government or regulators have done anything wrong. Unlike many governments, Malta is simply allowing a promising industry to grow without being unjustly antagonized.
In the coming decades – this may look extremely wise in retrospect.
On the other hand, the fact that major governments that have the ability to effectively regulate a financial system that is clearly out of control are asleep at the wheel is another matter entirely.
It is easy to forget that while there are offshore destinations that cater to the criminal class, these banking centers must have a bank in a major nation – think the USA or UK – as a counterparty to clear transactions.
Of course, having an offshore company or a bank account on an island that few people could find on a map is totally legal. And if this account or company was involved in illegal activity, well, it would be very hard to know much without a top-tier investigation team.
The deck – is – stacked. And not in the favor of the taxpayers who think the system is working for them, and is, at its core, basically honest.
The truth is the opposite.
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