How Lawmakers And Regulators Tackle Businesses In Crypto Friendly Nations Of Europe

How Lawmakers And Regulators Tackle Businesses In Crypto Friendly Nations Of Europe

Cryptocurrency regulations are projected as a hurdle in the progress of wider adoption, however, people don't realize that without the regulations there are more risks involved while dealing with digital assets. As in the absence of any hard-bound rules, it would be difficult to report or prosecute crimes related to the cryptocurrencies. The number of countries looking to form a well-structured framework for crypto use has been on the rise as the demand by the community is growing and taking pace.

Those nations who proclaim to be Pro-crypto like Malta, Switzerland, and Estonia have been trying hard to attract crypto businesses in lieu of easy business proceedings and support from the state authorities. However, running a crypto business even in the most favorable conditions come with numerous challenges along the way. We will try to debunk how these self-proclaimed crypto heavens haven't turned out the way many businesses have expected.

Malta Finally Approves Crypto Asset Agents

Whenever one talks about the biggest crypto heaven at present, Malta definitely tops the chart. The crypto island has recently approved 14 entities which would act as the first Virtual Financial Asset (VFA) agents in the country. These VFA agents would work as intermediaries between crypto offering businesses and the Malta Financial Services Authority (MFSA), who is responsible for finalizing approvals to the firms to operate in the country.

The 14 agents approved by the MFSA would help the crypto oriented businesses looking to operate in the country with legal and financial guidance. The agents would be working on behalf of the regulators and would become a screen before any business can obtain a regulatory license.

The selected agents are given the responsibility to evaluate the business plans of firms who have applied for a license and expect them to conduct due diligence under the anti-money laundering regulations. The regulators also expect these agents to guide token issuers and service providers operating under the country’s Virtual Financial Assets Act which came into force in November.

According to News.Bitcoin.com the approvals have been granted “in principle,” which means the details need to be clarified, as the local press reported. That happened more than four months after the filing of the first 28 applications and almost a year and a half since Malta began working on its crypto regulatory framework.

However, even after so many measures taken up by the regulatory bodies in Malta, the crypto business operators do not feel any ease in operations. The reason being banks on the island, who have refused to lend even basic services like opening a bank account.

The Strict Regulations  And Delayed Approvals Are Proving To Be A Roadblock

Malta might look like a pro-crypto nation as it advertises the same, however, if we go little deep in the country and try to understand what the situations is, its barely any different from many other countries who have been delaying their crypto framework for months. The recent approval of the VFA agents took almost 4 months since the country did not have any prior regulatory practice.

The newly approved agents would be responsible for the compliance of their clients with the law.

One of the business operators in Malta said,

“It’s likely that the regulator’s requirements are too strict and not every applicant has been able to prove that their verification procedures would prevent money laundering or the funding of illegal activities,”

How Can One Open Their Business In Malta

In order to register your business in Malta, one must have an office in the country, which can be done in accordance with the newly appointed VFA agents. The company must also possess the experts for the field they are dealing in. For example, your firm deals with smart contracts, then you must hire a system auditor. If any company fails to hire the experts, the regulators would provide professional from their side.

Malta might be known for being a crypto compliant island, but in reality, the success and support for one's business depend on the niche they are operating in. For example, among Malta, Gibraltar, Switzerland, and Estonia, which are known to provide a healthy business opportunity for crypto oriented companies, Estonia offers the best conditions for crypto trading platforms. The reason being there is a very small amount of capital required to start the project and the country offers friendly taxation norms along with the fast licensing process.

Switzerland Is An Expensive Destination For High-Level Projects

Julia Demskaya, a legal expert at SBSB who provides legal services for crypto oriented firms said,

“When we talk about reputation and if we want to present a high-level project, of course, the choice falls on Switzerland or Liechtenstein. However, launching in these countries requires a considerable budget, starting from 500,000 euros. On the other hand, working with banks as well as with customers there would be much easier compared to Estonia.”

Julia also talked about various jurisdictions in other parts of Europe and talked about Ukraine and the Russian Federation where many gray crypto oriented businesses are operating. However, it's quite difficult to keep a track on them since there are no crypto regulations in place.

“Introducing dedicated legislation would be the optimal solution, which would allow this type of businesses to be brought to light and possibly granted preferential tax treatment, which would make Ukraine an attractive country for investments. However, given the level of economic development and corruption in our country, even such conditions are unlikely to attract foreign capital,” the legal expert concluded.