In the past year, the Island of Malta made a name for itself as it strived to become the go-to-hub for blockchain and cryptocurrency businesses. However, it now appears that startups are encountering problems with account opening in local banks, as banks say cryptocurrency businesses are outside their risk appetite.

Last week, Times of Malta was able to gather information from crypto-related businesses setting up shop in Malta, following the trends of moving from toxic jurisdictions to more a friendly one. According to the news outlet, the sources confirmed that banks were politely declining their businesses.

While risk appetite may have been one of the reasons provided by the banks, another possible one is that the banks may be waiting for more clarity from Malta’s Financial Service Authority (MFSA) before attending to cryptocurrency startups. More so, it seems the banks are having a hard time distinguishing between cryptocurrency and blockchain-related ventures, and are lumping them up as a sum.

According to the Parliamentary Secretary for Financial Services, upon investigating the problem further, he discovered:

“THE GENERAL UNDERSTANDING IS THAT WHEN IT COMES TO CRYPTO OPERATORS, BANKS ARE WAITING FOR OPERATORS TO OBTAIN AN MFSA LICENSE BEFORE OPENING THEIR DOORS – WHICH IS UNDERSTANDABLE.”

The MFSA had said earlier that all crypto ventures aiming to operate from the Island should obtain licenses, and while it had said the first licenses would be issued in the first quarter of this year, the International Monetary Fund’s (IMF) interference with the process may have throttled the process, thereby creating a bureaucratic bottleneck.

The IMF expressed worry about the speed in which the blockchain industry in Malta had been developing and wanted more cautionary steps to be taken. In a report enumerating its risk assessment on the financial stability involving virtual-assets, it recommended immediate action on some critical gaps in Malta’s supervision for combating the Financing of Terrorism (CFT) and Anti-Money Laundering (AML). The report further urged gradual enforcement of the laws and regulations.