Cryptocurrencies : an analysis of their applicability and benefits in the Maltese business environment

Abstract

PURPOSE: The research objectives were to establish the current financial issues faced by local businesses, the perceived benefits of decentralised digital currencies (cryptocurrencies), determine their applicability to the local business environment and identify the threats that may hinder such benefits materialising. DESIGN: A qualitative research approach was adopted. Nine semi-structured interviews were conducted with representatives from four distinct industry categories, namely the accounting, banking, crypto and local business industries. FINDINGS: The findings indicate that local businesses suffer significant transaction costs and delays in settlement of both domestic and cross-border electronic transactions. DLT and cryptocurrency experts advocated a broad variety of benefits from cryptocurrency adoption, including speed, cost, security, privacy and traceability among others, that are potentially applicable to the local business environment. However, accountants reported a lack of clarity and consistency across practitioners in current accounting methods for cryptocurrencies due to a lack of official rules and guidance, while banks display strong scepticism and strict no-tolerance attitudes towards cryptocurrencies. Furthermore, considerable room for improvement in the local regulatory framework was noted in terms of updates and implementation of new legislation. CONCLUSIONS: The strengths and opportunities offered by digital currencies have a strong potential to change the local business landscape, offering both customers and businesses an alternative system that benefits both parties considerably. However, steps must be taken to mitigate the threats that would hinder successful widespread adoption. Namely, the researcher suggests regulators adopt a proactive approach to create the necessary infrastructure that would foster a safe environment for users. Such infrastructure and clarity would encourage confidence within local businesses as well as potentially allow banks to develop a more lenient attitude and encourage further cooperation. Furthermore, educational campaigns should aim to support the public in understanding the technology and address common misconceptions and misinformation. IMPLICATIONS: This is the first local explorative study of its kind focusing on the value cryptocurrencies bring to the Maltese business environment. The study promotes embracing technological developments in a comprehensively structured and cautious manner, which is key to sustainable positive change that maximises the benefits to society.