FATF Investigates Malta for Its Lax Regulation on Cryptocurrencies


Malta has reportedly been singled out by the FATF for its poor oversight of cryptocurrency transactions, local media reports.

June 22, 2021, | AtoZ MarketsThe Times of Malta reports that approximately €60 billion worth of cryptocurrencies has passed through Malta. The country is a haven for crypto enthusiasts and businesses as it has introduced various regulatory frameworks favorable to economic growth.

Malta in the spotlight

The report notes that global experts have reviewed Malta’s controls against money laundering by the influx of cryptocurrencies into the country has been deemed “problematic.” Officials with the Financial Action Task Force (FATF), a global body that deals with regulation to prevent financial crime, said the country should be on a list for not doing enough to counter financial crime.

FATF officials appear to have singled out Malta as such for its swift decision to become a hotbed for cryptocurrencies. Maltese officials have defended their decision, saying all necessary regulation has been put in place. Also, they said that the monetary amount is only 2% of global annual transactions.

Sources told the publication that FATF officials saw weaknesses in the country’s setup, while those in the country said none of the cases in question were significant. A key issue that was mentioned was the lack of oversight in asset trading.

Malta’s decision to support the crypto industry by designing friendly regulations in the aftermath of the 2017 boom led to it becoming known as the island of the blockchain. Many of the major names in the crypto industry have established themselves in the country, such as Binance and OKEx, two of the largest exchanges in the world by trading volume.

Read also: FATF Rates US as “Largely Compliant” With Crypto Regulations

Global regulation on cryptocurrencies underway

The meeting between Malta and the FATF is proof that the authorities are working on a global plan to regulate cryptocurrencies. For many years, authorities, even those in major countries like the United States, have stayed out of regulation. However, historic decisions and statements by high-level officials indicate that everything will change in the coming years.

In particular, the United States has hinted that it will develop a comprehensive framework for cryptocurrency regulation, courtesy of the Biden Administration. Sen. Elizabeth Warren has also spoken about the CBDCs, which the United States has yet to officially announce.

Meanwhile, China is shutting down mining operations in various provinces as it prepares to launch its own CBDC, which is one of the most experienced in the world. Europe, for its part, is seeing several countries develop their own CBDCs as the European Central Bank touts the advantages of a digital euro over private alternatives.

At the same time, securities regulators such as the US Securities Exchange Commission (SEC) and the Ontario Securities Commission are cracking down on projects and exchanges that may be violating securities laws. This broad push for regulation is a sign that the market may suffer some severe consequences, but perhaps there are no draconian laws that could have a damning impact.

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