Junior minister unfazed by imminent closure of Malta-based crypto exchange

Silvio Schembri has remained unfazed by news that Coinone Global Exchange (CGEX), a major Malta-based cryptocurrency exchange, is to shut down its operations less than a year after it was launched.

The Digital Economy parliamentary secretary, asked by BusinessToday whether he was worried by this development, dismissed it as being part of the normal cycle of businesses opening and closing.

Last week, CGEX, which is operated by the major South Korean company Coinone, said that it would close down in September after deciding that it “could no longer maintain service”.

When the company started its Maltese operation in October last year, Coinone’s CEO Cha Myng-hoon told South Korean daily The Korea Herald that CGEX would be striving “to become a major global trading site” which would provide a “distinguished exchange experience for users.”

Following the news of its closure, however, Schembri said that one should not focus only on individual companies when evaluating the blockchain sector in Malta.

“This is a whole ecosystem which forms a chain - you can’t only look at a small section of this sector,” he said, “[…] There are other companies which use this technology which are now looking at Malta.”

Man on the street to reap benefits of blockchain

On the subject of cryptocurrencies, Schembri said that since Malta had established a legislative framework for the sector, a number of Virtual Financial Assets (VFA) agents had been set up.

“This came about after a long process which included a verification process for players who were interested to enter the Maltese market as VFA agents,” he said, “VFA agents are the gatekeepers who will be processing the applications of companies interested in working in the cryptocurrencies sector in Malta.”

He noted that over 700 companies had presented a notification to the Malta Financial Services Authority that they would like to operate from Malta, opening the doors for them to submit a formal application for a licence. This, however, didn’t mean that they would all be granted a licence, since the government had put in place strict requirement which had to be met before being allowed to set up shop locally.

“…The government’s target is to attract the best companies in the sector. As with any new sector, there will be players who are only out to make a quick buck and have bad intentions. Therefore, the government set the bar very high, and is sometimes criticised for demanding very high levels,” he said.

“[The government] wants to ensure that the best companies are brought to Malta. We are in fact being compared favourably with other countries, who have decided to set their bar lower than Malta. For instance, one country in Europe has set its minimum capital requirement at €2,500 for each company. This contrasts with the situation in Malta, where the minimum capital requirement is of €750,000. So, the degree of seriousness in our legislation is at a whole other level.”

Asked how the man on the street would ultimately be benefitting from blockchain, Schembri said that new services would be offered to citizens which would be enabled by the new technology.

These, he said, included services such as quicker money transfers through eliminating third parties as well as much lower transfer and payment services fees.

“Moreover, blockchain will also provide more tangible benefits, such as by allowing students’ examination certificates to be made available on the blockchain. This means that whenever the student needs to present that certificate, no matter how far in the future, it will be readily available on the blockchain and accessible through a simple app.”

It will also provide for more transparency in different sectors, he underscored. “Recently, for instance, a tender was issued for the setting up of a rent registry. All rent contracts will be available on the blockchain, making it impossible for rents not to be registered.”

“And by the end of the year, the company registry will switch completely to the blockchain and to artificial intelligence, enabling anyone who wants to open a company to do so from the comfort of their home, 24 hours a day.”

Schembri added that a registry of lands and planning permits were amongst other services which were on the cards for being placed on the blockchain.