The International Monetary Fund (IMF) has evaluated the growth of blockchain in Malta as risky. According to the mission, the unparalleled growth has posed significant risks of terrorism financing and money laundering in the island’s economy, as reported by the Times of Malta, a local English language daily on Jan 24.
The article revealed that the IMF made its findings related to the island public and found that blockchain, along with financial and remote gaming sectors and the investment scheme based government citizenship, are some of the activities that are posing high risks to the island.
Malta and Its Love for Blockchain and Cryptocurrencies
Malta has always been a frontrunner of the blockchain technology, and recently, the Maltese government has brought into effect three blockchain and crypto-related bills to boost innovation and transparency.
Joseph Muscat, the country’s prime minister, has endorsed cryptocurrencies and regarded them as the inevitable future of money. He advocated for the technology’s transformative character on corporate, political and governmental applications.
IMF has cautioned Malta and suggested that the local authorities should ensure that all the blockchain efforts are in line with the AML requirements. IMF further recommended that the authorities should deepen their knowledge and understand the associated risks and should apply more sanctions to put the things under control.
Here is what the warning provided by the IMF reads:
“The increasing number of financial entities under supervision, the rapid development of new products, the evolving regulatory environment and the tightening of the labor market have put the Malta Financial Services Authority under considerable strain.”
In addition to the blockchain, other sectors posing high risks to Malta as identified by the IMF include labor storage, real estate market and strained infrastructure.
IMF has been known for advising countries from time to time. It recently published an advisory note for the Marshall Islands recommending them to avoid issuing a cryptocurrency and to keep in mind the potential money laundering concerns.
The country’s open endorsement of blockchain has earned them the title of ‘blockchain island.’ Alongside Switzerland and Liechtenstein, Malta is one of the leading countries in Europe to invest in blockchain and the first to provide a legal framework regulating cryptocurrencies.