Malta is rapidly positioning itself as the number one location for the blockchain-orientated businesses that are not only considering implementing the new technology but are also looking into cryptocurrencies.
In the recent months, the island has been prominent in the international media for its eagerness and courage to be the first one to create a regulatory framework for blockchain-based platforms, ICOs and virtual currencies.
To find out more about what has been happening, and what is the future of the #BlockchainIsland, BiteMyCoin, in partnership with ANCHOVY., met one of the driving forces behind this revolutionary changes – Hon. Silvio Schembri, The Junior Minister for Financial Services, Digital Economy and Innovation within the office of the Prime Minister of Malta.
Malta – The Worldwide Leader In DLT and Cryptocurrency Regulation
Only recently, Malta has been recognised by the IMF for its accomplishments in the iGaming industry and the regulatory framework that has been built around it. Now, it’s the time to repeat that success with the DLT and virtual currencies legislation.
The DLT regulatory framework will be built on three pillars that will provide certainty in the space that is currently lacking it. These will include:
Malta Digital Innovation Authority
The new authority will work similarly to MFSA, and its crucial function will be certifying DLT platforms. Currently, due to an unregulated market, these platforms can result in fraud and substantial financial losses.
The creation of MDIA will bring to existence certified surveyors who will be able to verify the information going through the platform and provide legal certainty, and trust, as well as the increase in efficiency.
Another aspect of the Authority would be advocating for the governmental policies and promoting Malta as a centre of excellence for innovative technology that facilitates the advancement.
Technology Arrangements and Services Bill
The second bill covers the new system for the registration of Technology Service Providers and the certification of Technology Arrangements through system administrators and auditors.
The current legislative framework doesn’t consider having contracts in a ‘smart’ format, and therefore it doesn’t offer proper regulation of smart contracts. With the help of TAS, the contract cannot be not validated just because of its ‘smart’ format.
To paint a real-life scenario; if someone decides to open a company using DLT, or an ICO, currently the individual doesn’t have to seek any regulatory framework.
With the new legislation, that individual would have to submit a TAS bill to the MDIA for approval and would have to comply with the developed legislation. This particular bill will officially put a stop to multiple ICO scams and cryptocurrency Ponzi schemes.
Virtual Currencies Bill
The third bill will set the framework for Initial Coin Offerings (ICOs) and the regulatory provision of services related to virtual currencies.
This framework aims at ensuring investor protection, market integrity and financial soundness through:
- Communicating all information to the investors through the White Paper
- Providing a license to anyone offering a service based on virtual currencies
- Introducing the ‘Financial Instruments Test’ by MFSA will have a power to issue directives, to adopt and publish rules, to require information, to suspend and ICO or to trade VC on an exchange
The Future of Blockchain Technology in Malta
As explained by the Hon. Schembri, the next step will be creating and maintaining a robust ecosystem for this particular industry niche. Establishing the legislation and attracting all these companies to the island was just the beginning of what will largely shape Malta’s economy.
However, the government is already planning the next move and looking into Artificial Intelligence and Internet of Things:
“I don’t think we will stop there; we already see that this authority will then widen up the scope to eventually go into the field of Internet of Things, Artificial Intelligence.”
Without a doubt, Malta’s launch of the DLT and cryptocurrency regulatory framework will be a huge success, resulting in the economic boost and hundreds of new jobs.
The government, together with Dr Abdalla Kablan, are throwing an official launch of the initiative during the Delta Summit in October. The event will be a formal opening of the new chapter in Malta’s history!
Read more about Malta Blockchain and Cryptocurrency Regulations.
