In the battle among Western Europe’s crypto-haven wannabees to win fresh investment, Gibraltar looks to be losing out to Malta due to its uncertain relationship with the European Union.
Some investors at the Delta Summit conference in Malta this week said they chose the island nation as a foothold in the region thanks to its direct access to the single market. Traditional havens Gibraltar and Switzerland were commonly rejected as options because they lack the same advantage. The regulatory future of Gibraltar, a British enclave on the tip of the Iberian peninsula, was thrown into question by the U.K.’s decision to leave the EU.
“Malta is staying in the European Union, and that’s not going to change,” Kris Marszalek, the CEO of digital wallet provider Crypto.com, said in an interview before the start of the conference. “I went to Gibraltar a while ago and they were very open about the fact that they had no certainty about what’s coming — it doesn’t look as if anything has changed since then.”
Malta is pushing into cryptocurrencies in a big way, branding itself blockchain island, with Prime Minister Joseph Muscat delivering a keynote speech at the event on Thursday. Smaller jurisdictions are seen as more nimble in their ability to set regulations that would allow crypto-firms to flourish.
The country comes with its own problems. The European Commission is preparing to issue formal binding demands on Malta’s financial regulator to strengthen enforcement of anti-money-laundering rules, according to the Financial Times. Last year, journalist Daphne Caruana Galizia was murdered in a car bombing after reporting on corruption.
The island is capturing an outsize share of crypto trading, according to research from Morgan Stanley. Crypto exchange Binance, founded last year in Hong Kong and now one of the largest, said in March that it’s moving to the island and it is working with other investors to create Founders Bank — an institution servicing digital clients registered here.
“Uncertainty is something we want to avoid,” said Will Roman, the chief operating officer of exchange LXDX, which was founded by a former SpaceX engineer and also rejected Gibraltar in favor of Malta as its regional home. “We don’t want to invest this much time and capital, only to have the rug pulled from under us.”