Why Malta for crypto business opportunities ?
And 5 accounting and financial tips for web3 entrepreneurs launching their project 💸
Today's Agenda...
Explore Malta for crypto ventures : streamlined setup, tax benefits, and regulatory insights from BlockReg Advisors. 💼 🌐
Antoine Scalia, CEO of Cryptio, advises web3 entrepreneurs on effective financial practices 🔍 💰
⏰ Reading Time: 5 min
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Cryptocurrency market evolution in Malta : Opportunities, Obligations and How to get started 🇲🇹
This article was written by BlockReg Advisors, a crypto regulatory consulting firm.
Malta has emerged as a key player in the global cryptocurrency market, often referred to as "Blockchain Island." With its robust regulatory framework, business-friendly environment, and strategic location within the European Union, Malta has become a prime destination for crypto entrepreneurs and businesses. This article provides essential insights into licensing and regulations for cryptocurrency activities in Malta.
Advantages of Registering
Well-Defined Regulatory Framework : Malta has implemented comprehensive regulations for the cryptocurrency sector, including the Virtual Financial Assets (VFA) Act, the Malta Digital Innovation Authority (MDIA) Act, and the Innovative Technology Arrangements and Services (ITAS) Act. These laws provide a clear and stable legal environment for crypto businesses.
Competitive corporate tax rates :
Attractive tax refund system for shareholders
Exemptions on certain types of income under specific conditions
EU Membership : As a member of the European Union, Malta provides businesses with access to the European market, offering numerous opportunities for expansion and collaboration.
Constraints and Obligations
Regulatory Compliance : Entities must adhere to stringent regulations covering capital adequacy, risk management, and transparency. Regular audits and adherence to Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) regulations are mandatory.
Documentation Requirements : Applicants must prepare an extensive set of documents, including certified copies of passports, proof of address, detailed business plans, and evidence of financial stability to meet the regulatory standards.
Financial Obligations :
Company Registration Fee : Approximately €245 for initial registration.
Annual License Fee : Fees vary depending on the type and scope of the VFA license, ranging from €8,000 to €12,000.
Legal and Professional Fees : Typically range from €10,000 to €25,000, depending on the complexity of the application and the services required.
How to Get Started in 4 Steps :
1. Company Formation :
Begin by selecting a unique company name and registering it through the Malta Business Registry. Establish a company with at least one director and one shareholder, ensuring compliance with local corporate regulations.
2. Documentation Preparation :
Gather the necessary documentation, including certified copies of passports, proof of address, detailed business plans, and financial statements. Ensure that all documents meet the standards set by the Malta Financial Services Authority (MFSA).
3. Licensing Application :
Prepare and submit your license application to the MFSA, aligning with Malta's regulatory framework for cryptocurrency activities. Include comprehensive AML and KYC procedures to demonstrate your commitment to regulatory compliance.
4. Initiating Operations :
Upon successful registration and licensing, begin operations while implementing robust internal controls to ensure ongoing compliance. Appoint an AML/CTF compliance officer to oversee adherence to AML regulations and reporting obligations.
In conclusion, registering your crypto venture in Malta offers a gateway to a favorable business environment, underpinned by a robust regulatory framework and attractive tax policies. Although navigating regulatory requirements and fulfilling obligations can be challenging, leveraging the advantages of Malta’s well-defined processes and strategic location within the EU can position your venture for success in the evolving cryptocurrency landscape.
Collaborating with crypto regulatory consulting firms like BlockReg Advisors can yield numerous advantages and ensure that the company is well-prepared for triumph in the dynamic and swiftly evolving crypto market. This partnership can safeguard the company's reputation, financial stability and cybersecurity while positioning it for success in the crypto industry.
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5 accounting and financial tips for web3 entrepreneurs launching their project 💸
Antoine Scalia, founder and CEO of Cryptio, an enterprise-grade accounting, audit and tax software for digital assets, brings a unique perspective to web3 entrepreneurs. Drawing from his extensive experience, Antoine highlights several crucial points for effectively navigating the complexity world of accounting and finance in web3.
1. Track everything and separate funds
One of Antoine's primary pieces of advice is to maintain rigorous tracking of all transactions.
"Everything must be tracked" explains Antoine.
Whether using solutions like Cryptio, other tools, or even manual methods for startups with a limited transaction volume, it is essential not to neglect this step.
Additionally, he recommends strictly separating the founders' personal funds from those of the company to avoid any confusion or potential issues.
2. Avoid extremes
Antoine warns against two extremes : total inaction and an obsession with perfect accounting from the start.
"You must avoid doing nothing and sweeping everything under the rug, but also avoid trying to do everything perfectly from the beginning," he says.
It is important to find a balance, starting with basic but consistent tracking and gradually increasing accounting rigor as the company grows.
3. Prepare for key events
According to Antoine, certain events mark important milestones requiring enhanced accounting practices, such as significant fundraising rounds or the first audit.
"You need to step up your game at these moments"
he advises, to meet the heightened expectations of investors and regulators.
4. Work with experienced accountants
Antoine stresses the importance of working with accountants who have specific experience with crypto companies.
"Accountants must know what to do with the tracking data you’ve collected,"
he explains. This ensures effective and compliant closing of the books.
5. Anticipate regulations
Finally, he encourages entrepreneurs to familiarize themselves early with potential regulatory requirements in their sector.
"There are things today that mean you have to start asking questions early about regulation," Antoine explains.
This includes understanding the implications of regulations like MiCA in Europe and preparing to obtain necessary licenses.
This article is based on an interview with Antoine Scalia on the Behind The Chain podcast hosted by Romain. Thanks to Antoine for his time.
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Disclaimer : The goal of this newsletter is to inform and produce content related to management in the world of Web3. It is not investment advice. Investments in crypto-assets and NFTs are risky and can result in the loss of your entire capital. Always conduct your own research and exercise caution.
As someone who lived in Malta for 10 years, this article is over-optimistic and promotional. Malta always failed to really become the "Blockchain Island", starting from its high costs. Indeed, the article mentions the lowest expenses, but fails to mention that a blockchain license can cost even 100,000 EUR, too much for any web3 startup. Indeed, web3 companies soon looked at Estonia when it comes to licensing, thanks to its lower costs and more professional and friendly environment.
Last, but not least, despite Malta got out quickly from FATF's grey list, its reputation is still tainted, and to this day, many banks still refuse to process payments to/from Maltese banks. This can be another serious problem for any business with global aspirations.