Just three months after announcing it would be moving its headquarters to Malta, Binance, the world’s leading cryptocurrency exchange, has entered into a partnership with the Malta Stock Exchange. The two organisations have teamed up to support fintech start-ups through the newly established MSX FinTech Accelerator Programme. This news brings Malta one step closer to solidifying its status as a European centre for financial innovation.
Accelerator programmes have become ubiquitous across Europe over the past few years. Paris, Berlin, Lisbon – these are just some of the cities that have used accelerator programmes to cultivate a lively start-up scene. The programmes provide support to early-stage companies with high growth potential through training, mentorship and access to capital. Typically, a start-up will participate in an accelerator programme for a specified time period alongside other promising ventures. The programme is meant to be both quick and intense in order to move these small firms onto their next stage of development.
The goal of Malta’s new MSX FinTech Accelerator Programme is to provide a supportive ecosystem that will facilitate the emergence of the next generation of fintech start-ups. It will be based at the Malta Stock Exchange and will offer a mentoring scheme that matches high-profile media and technology companies with fintech and cryptocurrency start-ups. Thomson Reuters, for example, has already committed to acting as one of the programme’s mentors. Crucial resources such as in-house accounting services and payroll, office space, state of the art communication, conference rooms and a training centre will be made available to the 12 start-ups selected to participate in the programme.
Partnering with a successful blockchain based company like Binance will help raise the profile of Malta’s new accelerator programme. Binance was founded last year in Japan by Changpeng Zhao. Through its initial coin offering, the company was able to raise $15 million to fund its expansion.
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What sets Binance apart from other cryptocurrency exchange is the speed and power of its platform. The exchange can process 1.4 million orders per second and hosts up to 20 million users. Measured by trading volume, these advantages have made Binance the largest cryptocurrency exchange. Specifically, the company’s daily trade volumes exceed $106 million.
In addition to its partnership with the Malta Stock Exchange, Binance also has plans to start allowing traders to convert cryptocurrencies into euros. Known as fiat trading pairs, this service is unusual as most exchanges only convert cryptocurrencies into other digital coins. The company announced earlier this month that the service will be based in Malta and that a new platform will be developed to support these trading activities.
Following the announcement of the new accelerator programme, Binance confirmed the important role that Malta’s friendly regulatory regime has played in expanding its business operations: “We moved our operations to Malta precisely because it has demonstrated its progressive approach to supporting and developing the crypto and blockchain industry. Malta is creating a safe and legislated environment for the industry to become reputable, attracting companies like ours and many others.”
Malta has been making a concerted effort to become a centre for financial innovation. The country has installed Bitcoin ATMs and earlier this year it hosted the Blockchain & Bitcoin Conference Malta. Binance received a particularly warm welcome from the Maltese government when it announced it would be moving its headquarters to the country. In a tweet, the Maltese prime minister, Joseph Muscat, wrote:
“Welcome to #Malta @binance. We aim to be the global trailblazers in the regulation of blockchain-based businesses and the jurisdiction of quality and choice for world class fintech companies.”
Most recently, three bills have been making their way through the Maltese parliament that will offer legal certainty to blockchain technology. The Virtual Financial Assets Act sets out the regulatory requirements for initial coin offerings, while the Innovative Technology Arrangements and Services Act will provide the basis for the legal recognition of blockchain-based enterprises. Lastly, the Malta Digital Innovation Authority Act will create a governing body responsible for supporting and supervising companies that focus on digital innovation.
Just this week, the Maltese Parliament passed three bills that will help cement Malta’s reputation as “the world’s first blockchain island”. This is significant given that legal and regulatory grey areas can impede further innovation and put both investors and users of these services at risk.
The three bills will work in tandem to ensure a stable business environment for firms using blockchain technology. The Virtual Financial Assets Act sets out the regulatory requirements for initial coin offerings and cryptocurrency exchanges, while the Innovative Technology Arrangements and Services Act provides the basis for the legal recognition of blockchain-based enterprises. Lastly, the Malta Digital Innovation Authority Act creates a governing body responsible for supporting and supervising companies that focus on digital innovation. The Authority will be in charge of certifying distributed ledger technology platforms (e.g. blockchain), thereby providing credibility to this nascent industry.
Studies have shown that accelerator programmes have positive spillover effects for the communities that house them. However, without addressing legal grey areas, the success of accelerator programmes remains limited. Thus, Malta’s thorough legal framework and due diligence in creating a structured economic environment for blockchain technology ensures that it will reap significant benefits from this new wave of financial innovation.