Crypto Exchange Malta — Part 3

In the sec­ond part of our three-part series on cryp­to-exchanges, we described the cen­tral chal­lenges and prob­lems that the exchange mar­kets are cur­rent­ly fac­ing. We then described the “Blockchain Island” Mal­ta as an attrac­tive loca­tion where cryp­to exchanges are wel­comed with open arms and ben­e­fit from a clear legal frame­work and the pos­si­bil­i­ty of obtain­ing an offi­cial license.

In the third and final part of the series, we are going to look at which Exchanges have already estab­lished them­selves in Mal­ta — includ­ing indus­try giants such as Binance and OKEx — and which ser­vice port­fo­lios they offer their clients. Final­ly, we take a look at the future and what role cryp­to-exchanges will play in the com­ing months and years.

Existing Exchanges in Malta and their service portfolio?

Due to the inno­v­a­tive and for­ward-look­ing legal reg­u­la­tions, espe­cial­ly for Exchanges, some of the largest names in the indus­try have already decid­ed to estab­lish a branch in Mal­ta. These include Binance — the largest exchange plat­form in terms of trad­ing vol­ume — as well as OKEx and Bit­Bay.

Binance was found­ed in 2017 by the expe­ri­enced Chi­nese devel­op­er Chang­peng Zhao and moved from Chi­na to Japan to escape the Chi­nese gov­ern­men­t’s cryp­to-ban. With­in a very short peri­od of time, many users and investors had been attract­ed, so that the plat­form became the largest cryp­to cur­ren­cy exchange in Feb­ru­ary 2018 with a mar­ket cap­i­tal­iza­tion of USD 1.3 bil­lion.

Binance made the head­lines all the more when it announced in March 2018 that it would estab­lish a branch in Mal­ta after Japan announced stricter laws in the area of cryp­to cur­ren­cies. Binance cur­rent­ly has more than 90 cryp­to cur­ren­cies in its port­fo­lio.

OKEx is anoth­er major cryp­to cur­ren­cy exchange that also announced its inten­tion to move to Mal­ta short­ly after Binance in April 2018. Found­ed in Hong Kong in 2017, the com­pa­ny is cur­rent­ly man­aged by Andy Che­ung. In August 2018, OKEx was the sec­ond largest cryp­to exchange in terms of trad­ing vol­ume and mar­kets served, accord­ing to Coin­Mar­ket­Cap. What is remark­able about OKEx is that you can trade futures as well as cryp­to cur­ren­cy pairs. The func­tion­al scope also includes Fiat trad­ing, i.e. trad­ing cryp­to cur­ren­cies against fiat cur­ren­cies, as well as so-called mar­gin trad­ing, in which you can bor­row cap­i­tal from the exchange and thus trade with lever­age. Mar­gin trad­ing is pos­si­ble with more than 100 cryp­to cur­ren­cies.  In addi­tion, OKEx has BTC, ETH and EOS futures sup­port­ed by real goods. There are cur­rent­ly a total of 508 mar­kets and cryp­to cur­ren­cies that can be trad­ed.

Bit­Bay is a cryp­to cur­ren­cy exchange orig­i­nal­ly found­ed in Poland in 2017, which announced in May 2018 in a press release that it would cease oper­a­tions in Poland and instead move to the Blockchain Island Mal­ta. Here too, in addi­tion to the prob­lem of obtain­ing sup­port from Pol­ish banks, the tech­nol­o­gy and inno­va­tion-friend­ly atti­tude of the Mal­tese gov­ern­ment was the deci­sive fac­tor. Although the ser­vice choice is some­what small­er than at Binance and OKEx, there are cur­rent­ly 62 cryp­to cur­ren­cies list­ed on Bit­Bay.

In recent months it has become appar­ent that many more exchanges will fol­low the exam­ple of Binance and OKEx. In August, zb.com, one of the 5 largest cryp­to exchanges in the world, announced that it also want­ed to set up an exchange in Mal­ta soon. This would allow them to enter the Euro­pean mar­ket and ini­tial­ly offer trans­ac­tions between cryp­to cur­ren­cies, but in the medi­um term also options to exchange cryp­to ver­sus Fiat.

After all, the orig­i­nal­ly Amer­i­can cryp­to-exchange Bit­trex has been rep­re­sent­ed with its own exchange on the sun­ny Blockchain Island since Octo­ber. The com­pa­ny also plans to apply to the Mal­ta Finan­cial Ser­vices Author­i­ty with­in the next 12 months for admis­sion as a licensed Vir­tu­al Finan­cial Assets Exchange.

OKEx is awarded as “Exchange of The Year”

The Mal­tese gov­ern­men­t’s com­mit­ment to the estab­lish­ment of com­pa­nies in the blockchain sec­tor is also reflect­ed in the event and co-organ­i­sa­tion of con­fer­ences such as the Mal­ta Blockchain Sum­mit. On the occa­sion of the con­fer­ence, which took place in St. Julian’s from 1 to 2 Novem­ber, the “Exchange of the Year” was elect­ed.

The award was pre­sent­ed in recog­ni­tion of all those per­son­al­i­ties, exec­u­tives, com­pa­nies and experts whose extra­or­di­nary com­mit­ment and ded­i­ca­tion have made an active con­tri­bu­tion to estab­lish­ing Mal­ta as an attrac­tive loca­tion for blockchain com­pa­nies from all over the world. In addi­tion, spe­cial efforts to devel­op and improve the cus­tomer expe­ri­ence and usabil­i­ty of Exchanges were to be recog­nised.

Since Binance is the indus­try leader and was the first major exchange to announce a move to Mal­ta, most prob­a­bly expect­ed Binance to win the race. But it turned out dif­fer­ent­ly. A high-cal­i­bre inter­na­tion­al jury of 32 cryp­to and blockchain experts, after exten­sive analy­sis of numer­ous cri­te­ria, came to the con­clu­sion that OKEx is the best exchange of the year and should be award­ed a prize for it. In the mar­gins of the award cer­e­mo­ny, Joseph Porteli, Chair­man of the Mal­ta Stock Exchange, also spoke about a project planned joint­ly with OKEx to devel­op a Secu­ri­ty Token Exchange in Mal­ta.

Importance of Exchanges in the Future

The role of exchanges for the future of cryp­to cur­ren­cies and blockchains can­not be over­es­ti­mat­ed. The more Ini­tial Coin Offer­ings and Secu­ri­ty Token Offer­ings spread, the more indi­vid­u­als and orga­ni­za­tions become investors in cryp­to cur­ren­cies, the more impor­tant the effi­cient, inex­pen­sive and imme­di­ate exchange of these cryp­to cur­ren­cies will become. Since the num­ber of trad­able cryp­to cur­ren­cies is also con­stant­ly increas­ing and a future is fore­see­able in which cryp­to cur­ren­cies will be on a par with the usu­al fiat cur­ren­cies, cryp­to exchanges are pre­des­tined to become tomor­row’s sought-after trad­ing places.

Due to the cur­rent trend towards the increased hold­ing of secu­ri­ty token offer­ings, i.e. the issue of share-like, secu­ri­tized tokens, more and more secu­ri­ty token exchanges will emerge in the future along­side ordi­nary cryp­to-exchanges.

This is also shown by the men­tioned pilot project between OKEx and the Mal­ta Stock Exchange with the aim of estab­lish­ing such an exchange.

The dynam­ic devel­op­ment in this sec­tor, which is espe­cial­ly emerg­ing in Mal­ta — the most attrac­tive loca­tion for cryp­to exchanges – is to be wel­comed. This also cre­ates healthy com­pe­ti­tion among providers, lead­ing to attrac­tive and user-friend­ly offer­ings for cus­tomers, while the watch­ful eyes of the Mal­ta Finan­cial Ser­vices Author­i­ty ensure exchanges pro­vide a com­pli­ant and secure trad­ing envi­ron­ment.

About Philipp Sauerborn

In 2005, Philipp Sauer­born joined the firm of St. Matthew in Lon­don, one of the lead­ing Ger­man account­ing firms in Eng­land renowned for its exper­tise in cor­po­rate, com­mer­cial and tax law, as a depart­ment head. After three years, he was a part­ner and man­ag­ing direc­tor.
Towards the end of 2011, he decid­ed to move to Mal­ta, where he first worked at inter­na­tion­al law firms and con­sul­tan­cies in an employed and con­sult­ing capac­i­ty. Since the begin­ning of 2013, he has been a senior employ­ee at Dr. Wern­er & Part­ner. Mr. Sauer­born is cur­rent­ly com­plet­ing his ADIT ‑Advanced Diplo­ma in Inter­na­tion­al Tax.

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