Blockchain technology is quickly becoming the order of the day in the digital world, expanding at a CAGR of 52.9% from 2024 to 2034. But why blockchain, you may ask? It is because this distributed ledger technology (DLT) records transactions in a way that makes them almost impossible to hack or change. In a world where 61% of customers are likely to recommend a brand they trust, businesses are turning to blockchain because its decentralised nature, security and transparency provide a foundation of trust.
Malta, a small island in the Mediterranean Sea, is making headlines as a global trendsetter in blockchain tech. Actually, it features in the top 10 list of crypto-friendly countries because it has established itself as a blockchain powerhouse. It definitely goes without saying that the country is opening up to Bitcoin and other digital currencies because of their benefits. So, in this article, we will look at how blockchain tech is impacting the country's finance sector and other amazing facts.
Crypto in Malta
Did you know Malta, famously known as Blockchain Island, was the first European country to adopt crypto legislation? In 2018, the Maltese government passed three bills aimed at establishing a regulatory framework for blockchain-based businesses: The Malta Digital Innovation Authority Bill to oversee and regulate innovative technologies like blockchain, The Technology Arrangements and Services Bill that regulates the technical aspects of blockchain, including software, coding, smart contracts, and related services. And the Virtual Financial Assets Bill regulates Initial Virtual Financial Assets Offerings (IVFAOs) and outlines licensing requirements for companies offering these services.
These bills that became law have allowed Bitcoin and other cryptocurrencies to thrive in Malta. Imagine tax does not apply to your long-term capital gains from cryptocurrency investments. For businesses, a favourable corporate tax rate of 35% applies, which can be further reduced through various incentives and deductions. This must be good news to investors.
On top of that, Malta's crypto-friendly banks, such as Paytah and Agribank, also make it a conducive country for crypto. In fact, Statista records that in 2024, the largest market in Malta is projected to be the digital assets market, with a total transaction value of US$10,220.00k.
The Malta Financial Services Authority (MFSA), their single regulator of financial services, has also stayed one step ahead in supporting blockchain and other DLTs in Malta's finance sector. It supervises all financial services activities in the country to ensure effective investor protection, integrity in the market and financial stability. The MFSA caters to virtual finance assets, including crypto and tokens, in the VFA Act. With all this government support, it is no surprise that the revenue in the cryptocurrency market of Malta is projected to reach US$245.0k this year.
Blockchain in payments
Another key area in the finance industry that blockchain has transformed in Malta is payments. Blockchain is slowly wiping out the traditional payment systems involving intermediaries that lead to delays and high transaction costs. The robust technology has laid a good foundation for decentralised finance, DeFi, which is now a rising star in the finance world. DeFi projects and investments in Malta are continually increasing because of its open-mindedness toward blockchain and cryptocurrency. DeFi provides a more secure and efficient alternative to traditional finance, and its global market is expected to grow by a CAGR of 9.07% (2024-2028).
Blockchain technology has laid a proper foundation for innovative financial services. FinTech is becoming more popular in Malta as more people are embracing mobile banking, digital wallets, online payments and peer-to-peer lending. In fact, as of December last year, 67.38% of the population were using the Internet for Internet banking. Part of the reason is that fintech services have become more secure and reliable thanks to blockchain. Last year, Malta was ranked third in the list of countries creating a suitable environment for the development of FinTech companies.
Cross-border transactions
Cross-border transactions have not been left out in the blockchain revolution. You probably have experienced some frustration when trying to purchase something online from a store in another country because of the shipping costs, delays and minimal transparency. Actually, a survey done about two years ago revealed that three out of 10 respondents saw a need for more modern cross-border payments. Blockchain is slowly changing the narrative and it is expected to facilitate about 745 million B2B cross-border transactions by 2025. This is because it has made cross-border payments significantly cheaper, faster and more transparent.
Several Maltese banks like MeDirect are offering their customers a more efficient way to send and receive money internationally. Blockchain technology has also improved supply chain payments by allowing businesses to pay global suppliers and partners quickly and efficiently. It is expected that by 2026, 75% of the top 20 global supply chain companies will have moved to blockchain payments.
Final thoughts
Malta's dedication to innovation and technology has made it a world centre for blockchain and crypto. They even established the Malta Digital Innovation Authority (MDIA), a government agency that promotes and regulates innovative technologies in their digital economy. The MDIA provides a one-stop shop for businesses looking to establish a presence in the country's blockchain ecosystem.
Blockchain's major contribution to transforming payments and cross-border transactions has brought safer, quicker and more cost-effective finance solutions to Malta's finance sector. These solutions, along with the very supportive government, have made Malta a desirable location for many blockchain-related businesses. With this trend, the country has great potential for a more innovative financial future.
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