Crypto haven is no longer safe


Swiss and Malta are now losing their reputation of crypto nation and blockchain island, just because of tightened regulation

Blockchain and crypto haven

Malta has expressed its desire to become a ‘blockchain island’ and it is taking steps to achieve that goal. One of the notable event was the decision made by Binance  to move to Malta. Binance is the largest trading platform in the world in terms of daily transaction volume.

Malta is a proactive country which provides a legal framework for DLT assets (distributed ledger technology) , and the government has released a set of guideline related to DLT assets. The guideline includes 3 Bills which are the MDIA (which ensures that appropriate ethical standards are conducted during the application process), the TAS (which regulates registration for services providing) and the VC Bill (which provides the rules and legal framework for ICOs and related cryptocurrency services.)

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In early March, the Swiss government launched the Crypto Valley Association to support the development of blockchain and similar encrypting technologies. The town of Zug in Switzerland is called the Crypto Valley, home for fintech startup companies. In 2016, Zug accepted Bitcoin payments for certain services in the city to examine the association between cryptocurrencies and government.

The haven is out of reach

On November 30th 2017, the Malta Financial Services Authority (MFSA) proposed the plan to implement the 'Financial Instrument Test'. The purpose of this test is to classify DTL assets and consider their suitableness within the legal framework established by  each nation and the European Economic Area (EEA). The scope of the test is all ICOs issued are conducted in or from within Malta.

The test will consist of 2 stages. Stage 1 will examine whether the assets are virtual tokens. If the assets are not virtual tokens, they will go into Stage 2 and will be  further classified into other financial instruments.

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According to the MFSA definition, virtual tokens will have no value, utility, or application outside the DLT platform that issues those tokens and they may not be traded for funds on that platform.

In mid-February, the Swiss government issued a guideline on the financial rules applicable to the ICOs. The Government stated that each ICO would be judged independently because there would be no common regulatory framework. Tokens will be divided into three categories: payment tokens, utility tokens, and asset tokens. Asset tokens will be considered as a type of securities and must follow many civil law requirements.

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Tim Draper, a billionaire and Bitcoin enthusiasts, criticized Switzerland because of the strengthening of rules that prompted many startup companies to move to Singapore or Gibraltar to launch their ICOs. Switzerland used to be a country of  great opportunities but it has set up many barriers that make the ICO issuers face more challenges. Peter Schnürer, Chief Digital Officer at Inventx AG, quoted Tim Draper who said he would rather choose Liechtenstein instead of Switzerland for ICO.

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