Malta Crypto: MFSA Licensing & Tax #36

Country facts

Malta crypto score

Trade and store crypto

VFA Act, MFSA licensing, and Malta’s blockchain island strategy

Malta is a cryptocurrency, blockchain, gaming, and AI hub that has been around for some years – but not without a price. Fraud is part of the package; the latest, involving $600 million in cryptocurrency, is one of the biggest anywhere. Security seems to be playing catch up in a crypto industry that is flowing with investments and ideas for parting people with their money – crypto or otherwise. On the statistics alone, Malta scores highly for the number of ICOs and, not surprisingly, the number of crypto transactions. Whether the bottom is falling out of the so-called ‘Wild West of Cryptocurrency’ remains to be seen, but it has moved up to 23 due in no small part to its trading volumes and blockchain community.

Malta officially recognizes Bitcoin and other cryptocurrencies without declaring them as legal tender – this is a stance in line with most countries – except El Salvador –see El Salvador Review. However, crypto is recognized as an exchange medium – having a value in transactions (cavemen did it with beads and bearskins) and being able to use it as a unit of account between two parties. Malta was one of the first countries to implement digital crypto asset-related acts with complementary legislation regarding blockchain technology. The country also has no prevailing stance on taxing crypto.

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Bitcoin mining in Malta

Mining is beyond the scope of most individuals and calls for significant investment in time, money, and equipment. Mining is perfectly accepted in Malta (even though electricity costs can be shocking). As with income tax laws, mining may or may not be subject to VAT, depending on how the mined coins are viewed. If they are viewed as a reward for providing services (validation of transactions) and the recipient can be identified, then the miner will have to pay VAT.

Bitcoin financial services in Malta

Fin services/retirement account

Most retirement and pension funds worldwide deem cryptocurrencies too volatile to
become part of long-term retirement schemes for mainstream pension funds. A high-net-worth individual will likely be able to pay the higher fees associated with the risk of having crypto as part of retirement planning.

Fin services/Banking interest

Malta’s banks had a quiet revolution a while back, refusing to play ball with crypto companies.
Things are easing, but all banking and financial firms must acquire various licenses to offer their services. Agribank and Paytah are deemed crypto-friendly and a crypto service provider, crypto.com, has recently been granted a license to issue payment cards and provide bank transfers to its customers.

Fin Services/Defi

Decentralized Finance is behind cryptocurrency’s rapid interest and growth and is underpinned by blockchain technology. Malta has highly regulated banks and financial services but there is no real movement in this area.

Crypto Exchanges

Best crypto exchanges in Malta

NAME			RATING	FOUNDED DATE	DEPOSIT METHOD	BASED IN	REVIEW	SIGN UP
#1		Crypto.com	4.6	2016	Credit Card Bank Transfer	Singapore	Coincub Review	Register Now
#2		OKX	4.25	2017	Bank card P2P third-parties crypto	Seychelles	Coincub Review	Register Now
#3		Bybit	3.6	2018	Card Crypto Sepa Wise Alipay Wechat Apple Pay Google Pay	UAE	Coincub Review	Register Now
#4		Gate	3.4	2013	Bank Transfer Credit Card Debit Card SEPA Apple Pay Google Pay		Coincub Review	Register Now

#1 Crypto.com 4.6

Register Now

FOUNDED DATE2016

DEPOSIT METHOD Credit Card Bank Transfer

BASED INSingapore

Review

#2 OKX 4.25

Register Now

FOUNDED DATE2017

DEPOSIT METHOD Bank card P2P third-parties crypto

BASED INSeychelles

Review

#3 Bybit 3.6

Register Now

FOUNDED DATE2018

DEPOSIT METHOD Card Crypto Sepa Wise Alipay Wechat Apple Pay Google Pay

BASED INUAE

Review

#4 Gate 3.4

Register Now

FOUNDED DATE2013

DEPOSIT METHOD Bank Transfer Credit Card Debit Card SEPA Apple Pay Google Pay

BASED IN

Review

Crypto regulation in Malta

Legal Latest

Leading global exchanges all operate within the country and are subject to The Virtual Financial Assets Act (VFA) which was one of the first pieces of legislation to establish a regulatory position for crypto exchanges, wallet advisers, and other crypto service providers. Such crypto services are also obliged to register with another act, The Innovative Technology Arrangements, and Services Act. It is the Malta Digital Innovation Authority that creates crypto strategy and policy going forward. With no particular new legislation on the horizon, it is The Malta Financial Services Authority (there are lots of authorities in Malta) that actively monitors crypto businesses and any risks associated with them.

Security

Overseas exchanges all have their own protection strategies against fraud but they are by no means consistent so you need to do your homework on the exchange that you choose. This involves looking at its record against hacking and also you may want to check about the levels and scope of the insurance it carries. Customer support is also another area you could look at.

Transparency

As with many government bodies, the Malta tax authorities can request information from crypto exchanges and expect compliance with their laws. You’ll need to provide your personal details.

Taxes in Malta

The tax situation for crypto-assets and the buying and selling of them seems to be very simple – but it can become very complex. Much depends upon definitions and interpretations of digital asset classes and how they are used and where the originating exchange is based. Malta is definitely crypto-friendly from a tax and legal position, with a generous tax regime for non-domiciled residents, and there are no wealth, inheritance, estate, or gift taxes. You may also be exempt from the capital gains tax, but all in all, it’s largely a question of having expert advice on your particular circumstances.

Tax Relief

Whether you pay or don’t pay tax on your use and trading of crypto assets is subject to the classification and use of your holdings; hybrid tokens, utility tokens, coins, security tokens, etc. In a nutshell, the tax treatment of any digital asset will ultimately depend on its purpose, the context it is being used as well as its categorization.

The whole question of residency and domicile is central to tax and crypto. The advantage of Malta for investors is to become a non-domiciled resident and the prospective tax advantages. If you completely up and move out of Malta the tax laws of that country will apply to you