Two-Thirds of Malta's 'Virtual Financial Assets' Agents Failed Compulsory Cryptocurrency Exam

  •  Malta's Virtual Financial Assets (VFA) Act will be effective as of November 2018.
  • Finance professionals such as accountants looking to offer crypto-related services must pass an exam (required by the VFA).
  • Results from an exam administered in September show that examinees performed very poorly.

The Times of Malta reported on Thursday (October 18th) that almost two-thirds of those that applied for a digital currency agent certification failed the standard exam - even though the assessment had been modified to make it easier for candidates to pass the test.

Malta’s Virtual Financial Assets (VFA) Act, which is scheduled to become effective as of November 2018, will require finance professionals looking to “act as agents” in the crypto industry to complete a training course and pass an assessment - which tests how well they understand concepts related to Bitcoin (BTC) and other cryptocurrencies.

The first such examination took place in September and local sources said that around 250 lawyers, auditors, and accountants took the test - which was commissioned by the island nation’s financial regulator, the Malta Financial Services Authority (MFSA).

Negative Marking Scheme

Malta’s Institute of Financial Service Practitioners had been tasked with administering the examination, which included several multiple choice questions (MCQs) that were checked by using a “negative marking scheme.” As most educators would know, a negative marking scheme deducts points from an examinee’s score if they choose the wrong answer.

Notably, the results of the exam - which was designed to test the examinee’s basic understanding of concepts related to blockchain technology and cryptos - showed that the test-takers performed very poorly as the pass rate was very low.

The test administrators then removed the negative marking scheme, however, the pass rate still remained quite low (only 39 percent). After learning that they had failed the test, the examinees expressed frustration because finance professionals will not be issued a license to offer crypto-related services if they cannot pass Malta’s government-administered test on cryptocurrencies.

"Blockchain Island" Strategy

As most crypto watchers would know, Malta is one of the world’s most crypto friendly jurisdictions as the island nation’s authorities believe digital assets have the potential to transform the world’s future economy.

In order to improve the country’s economy and create more jobs for locals, its government introduced the VFA Act - which is among two other laws that are a part of Malta’s “Blockchain Island” strategy.

Moreover, Malta’s progressive laws are aimed regulating its blockchain and crypto industry, while also providing a business environment that is conducive to the growth and development of innovative financial technology.

Malta also needs VFA agents that have passed its crypto exam, because their services are required by local blockchain startups that are planning to conduct initial coin offerings (ICOs).

Qualified VFA agents are also required in cases where companies provide portfolio management and investment advice on digital currencies.

Increasing "Capital Requirements", Adding A Written Section To Crypto Exam

Commenting on the low pass rate, Malta’s authorities said (in September):

[It has] become evident that certain industry players are not sufficiently prepared to register as VFA agents… [there is a] need to address an existing expectations gap, particularly in view of the inherent risks of this sector.

Malta's Government

In September, the MFSA had also proposed adding a written response section to Malta’s exam on cryptocurrencies, in addition to adding other compulsory requirements such as “continuous professional” development and education.

Malta’s regulators further recommended increasing “regulatory fees” and “capital requirements” associated with cryptocurrency licenses and businesses operating in the island.

FBI Arrests Russian Rapper for Crypto Laundering After Flaunting Wealth on Instagram

  • The FBI arrested Russian rapper Maxim Boyko on charges related to cryptocurrency laundering.
  • Authorities say Boyko, who has ties to now-defunct exchange BTC-e, was flaunting "substantial" sums of money on social media.

The Federal Burea of Investigation (FBI) has arrested a Russian rapper in the United States on charges of cryptocurrency laundering. 

According to a report by The Moscow Times, authorities arrested Maxim Boyko, 29, in a Miami condo on Friday. Boyko first came to the US with his wife and January and told customs agents his earnings came from bitcoin investments and rental properties in Russa. Boyko also operated several social media pages promoting himself as a rap artist under the alias Plinoffiical. 

The report claims Boyko’s Instagram page showed him flashing large sums of money, giving authorities a tip-off. 

In a request for an arrest warrant on Mar. 27, an FBI agent wrote, 

[Boyko’s] Instagram social media and Apple iCloud accounts include photographs of him with substantial sums of U.S. and foreign currencies dating back as far as 2015.

Authorities were able to trace the Russian rapper’s iCloud account to now-defunct crypto exchange BTC-e. According to the report, Boyko’s account had received almost $388,000 and withdrawn 136 bitcoin until the exchange was seized by authorities in mid-2017. 

The FBI alleges that Boyko is linked to an organized crime group by the name QQAAZZ which has facilitated the theft of “tens of millions of dollars.”

Boyko faces up to 10 years in prison if convicted. 

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