Philatelic postage stamp issue 2018 FIFA WORLD CUP RUSSIA™

On 14th June MaltaPost will issue a miniature sheet bearing one stamp marking the 2018 FIFA World Cup™.

“Investigations – like TAX3 — could lead to a lasting split in cryptocurrency markets, as exchanges face the choice of whether to comply with mounting regulatory demands” cautioned Cornell professor and computer scientist Emin Gun Sirer who is the co-founder of a peer-topeer virtual currency system called Karma, which pre-dates Bitcoin by seven years. “Exchanges will go one of two ways,” Sirer said. “Either they will clean their act, by first shopping for the most lenient jurisdictions with relevant KYC/AML and tax laws or they’ll go ‘fully underground,’ and operate with no rules, behind Tor and other anonymous communication technologies” with mixing capabilities to evade KYC/AML and tax laws.

Indeed, many exchanges from Asia and EU after shopping around for the most tax and regulatory lenient crypto jurisdiction have set up shop in Malta. As a result, according to a study conducted by Morgan Stanley, Malta now accounts for the largest share of cryptocurrency trading volume in the world.

Malta’s Prime Minister Joseph Muscat has described his country as the global trailblazer in the regulation of blockchainbased businesses and the jurisdiction of quality and choice for world class fintech companies. Muscat ties Malta’s success to becoming a member of EU’s Blockchain Partnership; its three new cryptocurrency bills adopted by parliament on April 24; as well as its favorable crypto tax policy.

The bills grant regulatory power to the Malta Financial Services Authority to publish and enforce specific rules regarding cryptocurrencies.

Malta Digital Innovation Authority Bill establishes the Malta Digital Innovation Authority, which on a voluntary basis, will certify blockchain platforms to ensure credibility and provide legal assurances regarding cryptocurrencies.

Innovative Technology Arrangements Bill provides a framework for the registration of technology service providers and the certification of technology arrangements concerning system administrators and auditors.

Services and Asset Bill

Virtual

Financial

provides the regulatory framework for cryptocurrencies and initial coin offerings (ICOs).

Writing on Cointelegraph, Selva Ozelli said cryptocurrencies are currently unregulated under Maltese law and exchanges of cryptocurrencies are deemed equivalent to commodity trading. A company utilizing cryptocurrencies isn’t required to obtain a license from the Malta Financial Services Authority unless it qualifies as a collective investment scheme or carries on the business of a financial institution or payment service provider, in which case the company would need to be appropriately licensed under the Financial Institutions Act.

Further, cryptocurrencies aren’t considered investment instruments under the Investment Services Act and don’t trigger any licensing requirements under the act.

In explaining Malta’s tax policy, three MEPs, David Casa, Roberta Metsola and Francis Zammit Dimech said “We will never allow the EU to decide on behalf of the Maltese people on how to run our tax systems. That was, still is, and must remain, the competence of the respective governments.”

“Maltese has no tax legislation regulating cryptocurrencies as a medium of exchange. Only if the sale of cryptocurrency is done on a habitual basis and/or the length of ownership is very short, the consideration of the sale may be considered as being income and therefore subject to income tax at 5 percent” said Dr. Mariella Baldacchino of E&S Consultancy.

Furthermore, “The Maltese Value Added Tax Department follows the European Court of Justice judgment in Hedqvist (C264/14). Therefore, transactions to exchange fiat currencies for units of cryptocurrency and vice versa are exempt from VAT as well” added Baldacchino.

Nevertheless, the US customers/investors of Maltese crypto-exchanges/cryptofunds should keep in mind their US tax obligations, including Foreign Account Tax Compliance Act and Report of Foreign Bank and Financial Accounts tax reporting requirements as reiterated by the AICPA in its second letter to the IRS.