Comparative Guides

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4. Results: Answers
Does the fintech sector present any specific challenges or concerns from a competition perspective? Are there any pro-competition measures that are targeted specifically at fintech companies?

Answer ... The main challenge that fintech companies face in Malta is the conservative attitude of Maltese banks, which have generally refused to open trading bank accounts for companies whose operations involve cryptocurrencies. Since several fintech companies are start-ups seeking to raise capital, often through initial coin offerings, the inability to open a bank account to receive contributions for their projects acts as a significant deterrent and causes significant delays when these companies are trying to take off. Fintech companies are currently using banks outside Malta, and this situation has opened the market for e-money institutions and payment institutions as well as digital banks that are willing to address the needs of this growing market.

In its fintech strategy, the Malta Financial Services Authority (MFSA) has included increasing competition as a goal in its mission statement. In order to achieve this goal, the MFSA refers to the European Commission’s Fintech Action Plan, which posits proportionality as one of three key principles in its approach to the regulation of fintech. The MFSA is cognisant that imposing unduly onerous regulatory burdens on small enterprises and start-ups would counter efforts to promote competition in the industry. It will thus apply the principle of proportionality to any new policies which address the fintech sector where current legislation is insufficient. Market integrity considerations remain paramount to the MFSA; thus, a risk-based approach will be undertaken when applying the principle of proportionality and regulatory sandboxes will be used to allow fintech start-ups to test innovative concepts in a limited controlled environment under the scrutiny of the regulator.

For more information about this answer please contact: Priscilla Mifsud Parker from Chetcuti Cauchi Advocates