Virtual currencies : benefits and risks for Maltese investors

Abstract

The aim of this study is to analyse how the benefits and risks of virtual currencies will affect their use as an investment tool among Maltese investors. This study will look at the current/proposed regulation of virtual currencies in Malta, and how the lack of regulation of virtual currencies affects its perception amongst Maltese investors.

A set of objectives were established, which are attained using both a quantitative and a qualitative research approach. First, a questionnaire is issued to potential Maltese investors and virtual currency users. Then, interviews are carried out with representatives from the MFSA and various investment advisors. Finally, a portfolio model analysis is conducted to assess the impact of investing in a virtual currency on an investor’s portfolio.

The main findings of this study were that both investment advisors and potential users of virtual currency are aware that there are several risks and benefits associated with the use of virtual currencies. However, there is also a tendency among some of the Maltese investors who invest in virtual currencies that they tend to overlook the risks of investing, as long as they can make profit.

This study suggests that there should be further awareness about the potential risks of investing in virtual currencies, and that adequate and appropriate regulation is introduced to protect the investors and to ensure proper development of virtual currencies and the technology behind them.