With the world’s largest cryptocurrency exchange Binance heading to Malta, three more exchanges decided to move their operations to offshore locations as well. The recent regulation policies accepted in China and Japan made fintech companies relocate their crypto trading businesses to remote islands.
Gibraltar’s government revealed its plans to create the appropriate regulation for digital currency circulation within its territory in February 2017. The Gibraltar Financial Services Commission made a proposal to create a secure and efficient regulatory system for innovative companies, enabling them to store and transfer financial technology value with the help of the distributed ledger technology (DLT).
Coming into effect on January 1 this year, the regulation requires crypto trading entities aspiring to operate within the local cryptocurrency market to purchase a special DLT license. To obtain the license, one must pay the government fee of £20–30 000.
However, some risks must be considered before moving a business to Gibraltar. Being a part of the UK, the island’s economy can be largely affected by Brexit. Furthermore, the data on beneficial owners of the companies must be disclosed under UK law, keeping citizens from corruption, tax dodging, and money laundering. A company with the DLT license must have a corporate bank account, according to Gibraltar’s law. However, whether bank institutions are ready to deal with exchange operations from fiat currency to virtual coins remains a tough question.
Nevertheless, given the taxation procedure, Gibraltar can become a very good place for a lot of companies. Corporate tax within the area is only 10% without the tax on dividends.
As for the legal basis, Malta Financial Services Authority (MFSA) initially suggested a scheme regulating cryptocurrency investments in 2017. The draft claims that each qualified investor has to obtain a license giving him a right to make investments in digital currency. Parliament of Malta started to discuss the matter of crypto market regulation in April.
If the government passes the draft law, Malta may become a crypto paradise for traders. It will build the necessary framework for the development of fintech platforms, digital currency businesses, crypto exchanges and so on.