Malta’s ‘blockchain island’ strategy falters as banks refuse to play ball

Malta’s plan to become a"‘blockchain island" appears to have stalled, with few retail banks indicating a willingness to work with crypto firms.

Malta’s Finance and Employment Minister, Clyde Caruana, has revealed that the nation’s plan to become a “blockchain island” is floundering due to the unwillingness of local banks to work with innovative firms.

Speaking to local media outlet Lovin Malta, Caruana noted that few local businesses have been able to secure banking partners, asserting: “Traditional banks have written off blockchain at its early stages.”

“The banks must be convinced that this is something that can really happen; unless banks are on board it will be very difficult.”

Caruana emphasized the need to invest into building the skills needed locally to support a flourishing blockchain sector, arguing: “There’s always the potential [to be a blockchain island] but if we want to make it happen, there must be more work.” 

What Caruana terms "retail banking skepticism" affects not only blockchain, but other emerging industries such as the island's plan to support medical cannabis. In addition to the apparent banking disinterest, the minister emphasized that the lack of local skills was hindering the growth of new industries in Malta:

“It’s not just about whether the industries are new or old, but rather a question of skills. [If] investors don’t find what they require, they may think twice. If we want to keep on attracting investment to Malta, we must make sure we have what it takes in terms of skills.”

Malta’s parliament passed blockchain-friendly regulations in 2018 as part of its bid to emerge as a global hub for crypto and DLT, with the island quickly becoming home to offices of the world’s then-largest crypto exchanges by volume, Binance and OKEx. 

However, the resignation of former Maltese Prime Minister Joseph Muscat in February 2020 precipitated revelations that the Malta Financial Services Authority had not issued a license to a single crypto firm.

While Malta’s new administration has publicly reaffirmed its commitment to establishing Malta as a global crypto hub, progress remains slow — although debit card provider and exchange platform Crypto.com became the first company to receive licensing from Malta’s local financial regulator on Nov. 24.