The implementation of the EU MiCA regulation has sparked controversy, and Malta's fast-tracking of approvals is under scrutiny.

Just weeks after the implementation of the EU Crypto Asset Market Regulation (MiCA), Malta issued licenses to several major exchanges, raising questions about its approval standards within the industry. Companies holding a MiCA license can operate in 30 European Economic Area countries, making Malta the preferred location for crypto giants to establish their presence in Europe.

The "Virtual Financial Assets Act" launched by Malta in 2018 ( VFA ) laid the foundation for its rapid transition to the MiCA framework. The framework stipulates that companies holding VFA licenses may enjoy a fast track and pre-authorization eligibility for MiCA before December 30, 2024. Maltese regulators stated that a mature local system could accelerate the approval process for existing businesses.

However, Malta's rapid approvals have raised questions about the substance of its regulation. Liat Shetret, Vice President of Elliptic, pointed out that smaller jurisdictions can indeed adapt to regulatory changes more quickly, but there are doubts as to whether rapid approvals are accompanied by corresponding enforcement capabilities. She emphasized that ongoing regulatory mechanisms and professional crypto enforcement teams are key.

The CEO of Poland's largest exchange Zondacrypto, Przemysław Kral, compared it to "fast food and Michelin-starred restaurants" to explain his reason for abandoning Malta and choosing the more strictly regulated Estonia. He bluntly stated: "MiCA approval should not be as casual as ordering fast food."

Despite this, several crypto giants have chosen to apply for MiCA licenses in Malta. A major exchange obtained pre-authorization on January 23 and received the official license just four days later. However, the company reached a $500 million settlement with the U.S. Department of Justice a month later due to charges of unlicensed operations, among others. The Maltese regulatory authorities responded by stating that they adopt a risk-based approval principle, emphasizing "a prudent assessment based on available information at the time, balancing efficiency and risk."

French regulators have expressed concerns, warning of the "fast-food" approval risks associated with MiCA. The chairman of the French Financial Markets Authority (AMF) has called for stronger coordination with the European Securities and Markets Authority (ESMA) to prevent companies from choosing the most lenient approval locations.

The authorization process of MiCA has transparency issues, and there are significant differences in approval standards among member states. This regulatory disparity leads to clear preferences for companies: France has approved only 3 crypto asset service providers (CASP), while a major exchange withdrew from the French market last July.

EU regulators are conducting a review of Malta. According to reports, multiple national regulators have urged ESMA to investigate a certain exchange and review Malta's approval process. ESMA has initiated a "peer review" of a member state with lenient regulations.

Mark Foster, the EU policy head of the Crypto Innovation Committee, pointed out that France's objections to the fast-track approval model reflect the fundamental contradiction in the EU's implementation of MiCA: the balance between regulatory centralization and member state autonomy. He raised the key question: "Should the EU choose a federal centralized decision-making system to counterbalance China and the US, or maintain decentralization to respect the specialized advantages of each country?"

Apart from regulatory controversies, Malta has recently engaged in legal confrontations with the European Commission over its "Investment Citizenship Program." The European Court of Justice ruled that the country's "Golden Visa" program, which sells EU citizenship to investors, is illegal. The European Commission stated that the program opens the door to money laundering, tax evasion, and corruption.

Although the "golden visa" has no direct connection with cryptocurrency regulation, there are similarities in Malta's approach to attracting wealthy individuals and crypto giants. An anonymous compliance expert stated: "There are arbitrage opportunities in the European regulatory system, allowing companies to choose easier paths. If businesses rush to Malta due to delays in approvals from other countries, it indicates that we have failed to establish an effective system for legitimate trading institutions."