Malta Eyes Repeat Of ICO Boom With First Regulated Crypto Sale – Decrypt


In brief

  • Malta has authorized its first regulated crypto public offering, after two years of deliberations.
  • The recipient is VAIOT, which develops AI-powered services for businesses.
  • The country’s regulator still has dozens of applications under consideration, many of them from crypto exchanges.

Crypto-friendly “Blockchain Island” Malta will launch its first regulated public offering this year, for AI-blockchain hybrid VAIOT, which has become the first project to be approved by the country’s financial regulator. 

Announced on Monday, the first approval by the Malta Financial Service Authority (MFSA) has been a long time coming. Malta’s crypto regulations, billed as the most innovative in the world, were first announced in 2018, and startups flocked to the island seeking regulatory approval. 

Now VAIOT, which develops AI-powered services for businesses, hopes to be the first in a wave of Malta-based projects to raise funds by way of a regulated Initial Virtual Financial Assets Offering (IVFAO) as opposed to an Initial Coin Offering (ICO). Regulatory approval for other projects, including crypto exchanges, is eagerly awaited. 

“[Malta] is leading the way for upcoming EU regulations to be implemented by European countries.” VAIOT CEO Christoph Surgowt told Decrypt. “We will be able to offer our token in an ecosystem that will not only support the development and evolution of virtual financial assets and innovative solutions, such as VAIOT, but protect investors and token traders.”

Blockchain Island’s balancing act

Malta received 340 preliminary crypto license applications in 2019 alone, but none were approved until now, as the Mediterranean island balanced compliance with European Union (EU) regulations with its dream of becoming “Blockchain Island”—a one-stop-shop for crypto innovation.

But contrary to the “Blockchain Island” hype, industry insiders branded the application process as too expensive, and the regulations as too stringent. Startups left in droves. Even Binance, the leading crypto exchange by volume, pulled back its operations on the island, and said it was no longer seeking a license there. 

“Smaller island countries, like Singapore, Bermuda, Jersey and Malta—they’re faster at adopting new regulations and more open to innovation,” Binance CEO Changpeng Zhao told Decrypt. Significant financial advantages will accrue to countries that adopt favorable regulations, he said, adding that, in his view, blockchain fundraising was the industry’s “killer app.”

But the EU has remained unimpressed with Maltese efforts to clean up the island’s money laundering reputation, which was further tainted in the wake of the murder of investigative journalist Daphne Caruana Galizia.

However, legislation to turn cryptocurrency into a regulated financial instrument was proposed by the EU in September. If passed, it will provide a unified licensing regime across all 27 member states by 2024. Malta’s goal is to leverage its innovative crypto framework to pave the way. 

VAIOT: marking a milestone for cryptocurrency regulation

VAIOT, currently in beta, develops purpose-built virtual assistants ( “Siri” for businesses) powered by AI and blockchain technology. It’s targeting the car insurance industry, and recently secured €5 million through a private sale of its VAI Tokens, according to the announcement. 

To achieve regulatory approval for its forthcoming token sale, VAIOT needed to demonstrate that proper procedures were in place to prevent money laundering and terrorist financing, according to Surgowt.  The project went through security and smart contract audits with a provider approved by Maltese authorities. The ultimate aim [is] ensuring the security of our investors,” he emphasized.  

Now the industry is watching keenly for the next project to gain MFSA approval. The fate of many of the 340 initial applications is unknown, and only 26 startups were still contenders in the application process, as of March 2020, according to the MFSA. In the main, they are cryptocurrency exchanges, such as crypto.com, Gate.io, and ZBX.



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