This week your author had one of those very odd conversations about cryptocurrency and blockchain. I happen to consider myself something of an expert in the space, to a degree. However, I was stunned by some new information.
While writing about the growing scene in Malta as it positions itself as The Blockchain Island I learned that we might have been here before once already. It turns out that a few years ago the Isle of Man, a small country that is part of the British Isles and sits between the UK and Ireland, launched an effort to attract crypto start-ups. Who knew…?
I found this out and then by an unusual coincidence found myself talking to the first ever Manx citizen that I have met. I duly asked the young lady about the crypto ecosystem in IoM. She literally replied, “The what?”
Despite the Isle of Man being a very small place and my new friend living there her whole life, she had never heard of a crypto company located there. To help me out and satisfy her own curiosity, she called a friend that works in corporate consulting on the island to find out more.
It turns out that the IoM did pass legislation to make oversight and a legal framework possible. However, businesses in the crypto world have a very real and pressing need for fiat banking relationships. The conservative bankers of the Isle of Man decided that they didn’t much like these start-ups and made it incredibly difficult to open normal company bank accounts. The cryptocurrency companies left town to greener pastures.
Will The Blockchain Island Fail?
This sounds very similar to the situation that Malta finds itself in. Malta’s largest home-grown bank, the Bank of Valletta put a ban in place in late 2017 that stopped account holders from conducting any transactions with crypto exchanges. At their May 2018 AGM the bank said that it was “dealing with it“, despite the ban remaining in place. BOV’s largest shareholder is the Maltese government. Consider that the ban is for normal consumers buying and selling. Businesses that will have much more complex requirements have no chance.
The crypto and blockchain spaces move quickly. Blockchain years are a little like dog years – they are about seven to one. If the Maltese infrastructure cannot be put in place quickly, it is very likely that the ICO start-ups and exchanges will move on to other jurisdictions. Malta needs to move fast.