Malta Gaming Authority ‘sandbox test’ of cryptocurrency impact

TAGs: Bitcoin, cryptocurrency, europol, Italy, Malta, malta gaming authority

malta-gaming-authority-cryptocurrency-testMalta’s gaming regulatory body is proceeding with a ‘sandbox test’ of its cryptocurrency controls before allowing Malta-licensed online gambling operators to accept digital currencies such as Bitcoin.

On Monday, the Times of Malta reported that the Malta Gaming Authority (MGA) had enlisted the help of auditing firm PricewaterhouseCoopers (PWC) to conduct the test, which involves introducing a fictitious cryptocurrency within a controlled environment and seeing what threats – if any – it presents to Malta’s overall economy.

MGA chairman Joseph Cuschieri said the Malta Financial Services Authority, the Financial Intelligence Analysis Unit and the Central Bank of Malta would participate in the sandbox test and provide feedback.

In April, Malta’s Prime Minister Joseph Muscat revealed that Malta was working on a national strategy to promote blockchain technology, and a Muscat spokesman told the Times that the PM wanted to make Malta the “blockchain capital of Europe.”

It was only a year ago that Cuschieri said the MGA still viewed Bitcoin as “a risk,” but Cuschieri more recently declared that the MGA could no longer maintain a “do nothing” mindset on the subject. In July, the MGA released a report indicating that the regulator was “committed to allow the use of crypto-currencies by its licensees in the immediate future.”

Cuschieri cautioned that cryptocurrencies were “a double-edged sword, combining opportunity with significant risks.” Cuschieri said it was of paramount importance that Malta preserve its reputation as a safe place to do business.

Malta’s reputation took a beating via a recent report by pan-European crime fighters Europol, which claimed the island nation generates too few suspicious transaction reports (STR) given the size of its financial services and gaming industries. The report went on to cite the 2015 case in which Italian prosecutors took down a Malta-linked illegal online betting ring controlled by the ‘Ndrangheta crime organization.

The MGA pushed back against Europol’s claims, noting that the regulator had, in the wake of the ‘Ndrangheta case, conducted a review of its internal processes to assess any vulnerabilities and had stepped up its mitigating measures to target potential risks.

Apparently big fans of the ‘trust but verify’ school of compliance, members of Italy’s Parliamentary Anti-Mafia Commission plan to visit Malta on October 23 to inquire into what Senator Stefano Vaccari called “significant delays” in Malta fulfilling requests for information from Italian magistrates investigating online gambling activity.

Vaccari told Gioco News that the ‘Ndrangheta case had exposed the ability of criminal organizations to “exploit the gaps in legislation” and that all online gambling operators have to “do more and better in terms of transparency” to ensure Italian authorities can disrupt criminal activity “before they produce huge gains” like the ‘Ndrangheta case.


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