The tiny Mediterranean nation of Malta has thrived on the iGaming industry for over a decade, but there is a new potential player in town.
If you haven’t already heard of Bitcoin, cryptocurrencies and the blockchain, then I can only imagine you have been hibernating for the last 12 months as it has taken the world by storm.
From governments, banking and the legal sector, to logistics, healthcare, and more- blockchain is radically changing the way we do things.
The march of blockchain technology has been compared by many to the beginning of the internet in the way that it will not just be a huge driver of economic growth, but that it will change the way we do everything – the way data is handled, the way the banking system works, and the way in which we do day-to-day business.
The World Economic Forum estimates that by the year 2025, at least 10% of the global GDP will be managed and facilitated through blockchain technologies.
Malta has always aimed to be leaders when it comes to technology and digital industries, and the dedication of the government and the support of the public and the business sector means it is the perfect place for such business to develop and grow.
With blockchain, crypto and ICOs making big waves across the world, what does this mean for the shores of Malta?
Malta is looking to position itself as a leading jurisdiction for this type of business, but the question is will blockchain companies Malta overtake the already flourishing online gaming sector?
Let us read on to see:
- The History Of The iGaming Industry In Malta
- iGamning Boom Compared To Blockchain Boom
- Blockchain Strategy In Malta
- Malta Proposed The First Regulatory Framework For ICOs, DTLs and VCs
- Will Blockchain Companies Overtake Gaming In Malta
The History Of The iGaming Industry In Malta
The iGaming industry has been a backbone of the Maltese economy for many years now and has seen Malta become an internationally renowned jurisdiction for the registration and operation of iGaming companies.
It is now home to hundreds of iGaming operators and employs thousands of people in roles from live dealers, to customer service agents, as well as lawyers and marketers.
One leading company, Betsson Group, employs almost 2000 people and accounts for about 1% of the islands GDP.
The iGaming industry has had a knock-on effect on other business types in Malta.
Due to its success, the financial services and FinTech industries have bloomed, and there are multitudes of bespoke accounting, finance, auditing, legal, software, hardware, and other types of businesses that are designed to cater specifically to the iGaming sector.
Over the last couple of years, the Malta Gaming Industry has become known as one of the world’s leading regulatory bodies for the provision of legal frameworks, standards, and regulations in online gaming.
The Maltese government saw a tremendous opportunity when online gaming started to boom, back in the early 2000s.
As developers, gaming operators, and other businesses affiliated with this new and exciting industry started to pour into the island, the government took the bull by the horns, and instead of cracking down on this new business, they created a way to help it benefit the country.
Can The iGaming Boom Be Compared To The Current Blockchain Boom In Malta?
There are a few similarities between iGaming and blockchain regarding their popularity and the way in which they have grown and could grow in the future.
The iGaming industry was initially regarded with a little cynicism and scepticism, but with time, and adequate regulation and adherence to legal standards, it has gone on to flourish and become a huge part of the Maltese economy.
Blockchain technology is similar in some respects.
A new, and to some, unknown bit of tech, it has made waves across the business community, and while some are wary of it still, it is being adopted more and more by leading companies and businesses.
Its potential is vast and far-reaching, and if Malta can position itself at the right time and in the right way, it can be set to reap the benefits of what the future will bring.
iGaming was regarded with suspicion in the early days, but now, without it, the economy would not be in the same, healthy shape that it is.
It is expected that with the introduction of the government’s blockchain strategy, as well as the quick uptake of the technology from local businesses, Malta will soon lead the way in this exciting new sector.
This means not only will it improve its reputation as a digital leader, but it will also bring a massive boost to the economy and create many more jobs.
This is precisely what iGaming did.
Blockchain will also boost other industries that compliment it – hardware, software, marketing, legal, financial, the list goes on for those stakeholders that will be able to grow and nurture their businesses when blockchain takes off.
The Blockchain Strategy In Malta
When it comes to a blockchain strategy, there are several that are being implemented in the public and private spheres.
Back in 2017, the Maltese government launched its intention to create a specialist blockchain taskforce that would bring together all of the leading stakeholders and experts in the area to discuss a way to regulate, yet support the growth of blockchain technology and cryptocurrencies.
Then in January 2018, the Malta Financial Services Association and the Parliamentary Secretary, Silvio Schembri announced their plans for Malta to be the first jurisdiction in the world to create a regulatory framework for blockchain technology.
They launched proposals for three separate bills for public consultation that will seek to revolutionise the way blockchain is seen, operated, and supervised, not just in Malta, but globally.
But more on that later.
Regarding the private sector, many forward-thinking firms and company’s have already started making waves in the blockchain industry.
From ICOs, creating their currencies, as well as outlining structures for helping blockchain startups to set up their businesses on the island.
With such a wealth of local knowledge, the foundations are already in place for a full administrative, legal, and regulatory framework to fully support the development of the industry and all of its stakeholders.
Malta Proposed The First Regulatory Framework For ICOs, DLTs and VCs
Malta has always had an intense interest in digital technologies, and the February announcement from the Maltese government just reinforced that.
The Government announced that it had been working extensively with private parties, both locally and abroad, to identify the changes in their administrative and legislative systems, which are required for the accommodation and encouragement of disruptive digital technologies.
This places Malta at the front of the scene when it comes to creating a blockchain-regulated state with clearly identified and enforced frameworks for ICOs, DLTs, and digital currencies.
As a result of this, Malta will be able to position itself as a prime location for attracting international businesses that are looking for a reputable and supportive jurisdiction to establish their blockchain or virtual-currency business.
The proposed framework consists of several key points:
- The creation of a Digital Innovation Authority
- The voluntary registration of Technology Service Providers
- Certification of DLT Platforms and related smart contracts
- A process of approving an ICO developed by the MFSA
- Regulation of service providers of digital currencies including brokers, exchanges, investment managers, wallet providers and asset managers, amongst others.
These proposals will form a part of three new bills; The Malta Digital innovation Authority bill, the Technology Arrangements bill, and the Virtual Currencies bill.
At the moment, the proposal only covers Bitcoin and altcoins although, after its enactment, there will be a 6-month period of adjustment which will allow full compliance with the bill and considerations for additions.
In November of this year, Malta will also be host to the two-day Blockchain Summit that will bring together a wealth of industry-involved speakers who will share their visions, experiences, and plans for the future of the blockchain sector.
The decision to hold this even in Malta is another good indication that the country is set to become the go-to location for blockchain and virtual currency related business.
Will Blockchain Companies Overtake Gaming In Malta, Are They Going To Compete or Coexist Together?
It is unlikely that iGaming and blockchain companies will compete in the traditional sense of the word. They are entirely different industries and as such require very different legal, creative, and administrative staff.
Additionally, the client base would not be affected either as the concepts are so different, it is unlikely that iGaming would lose any business to the world of the blockchain.
It is expected that the introduction of the new blockchain frameworks will influence the existing regulations around the iGaming industry.
The proposed blockchain bills will be broader and more comprehensive while encouraging a better monitoring of risk and more stringent reporting procedures.
These new proposals will also provide the iGaming industry with faster, cheaper, and more efficient alternatives to traditional payment methods which will revolutionise the way in which they both take payment, and pay out winnings.
Rather than pitting the two industries against each other, legislators and stakeholders need to find a way to ensure that they compliment each other and offer new ways to do business, and to grow their respective sectors.
Already, the seeds of cooperation are being sown, and some iGaming platforms are already using blockchains to their advantage. Online casinos have always been at the forefront of technology, and some platforms are already using the blockchain.
FunFair is one of the games’ developers that has harnessed the power of this new technology to provide its clients with more peace of mind when it comes to data protection, transparency, and unrivalled levels of security.
Trust in an online gaming platform is very important and this Ethereum-powered gaming platform uses a public ledger that is entirely transparent and allows gamers to see all of their information freely at any time.
Smart contracts are also something that can be utilised in the online gambling world.
The simple “if this, then that” formula that they use to function, lends itself very well to the way in which these sites work. For example, you could code a smart contract to only pay out winnings when your hand at blackjack beats the dealer.
They could also be used to give the house your stake if the roulette ball does not land on the colour you wagered on.
This will help increase levels of fair betting as well as consumer trust in their service providers. One area, however, where there may be a bit of overlap is when it comes to personnel.
At the moment there is a considerable shortage of developers that are capable and trained in matters of the blockchain.
Blockchain startups are offering huge salaries to those that can do the job, and this could result in a situation where developers and programmers involved in the creation of iGaming products, could be tempted to hone their skill set and jump ship to the blockchain.
While blockchain as a technology cannot be regulated as such, its use and scope can, but the key is not to stifle its potential and to ensure it remains as a catalyst for further innovation.
By combining these two industries, we can create a fairer and more transparent gambling sector with a much more secure and transparent infrastructure.
This collaboration will also help develop new purposes for the blockchain sector and help it develop and grow into more and more parts of our society.
These two industries combined will be of a huge benefit for Malta economically, socially, and in the world of business.
It is already on the map for its iGaming industry, but with the country taking huge strides into the ICO, blockchain, and cryptocurrency industry, it is set to solidify its reputation as a world leader in innovation.
For more information about blockchain companies in Malta, read our detailed explanation of Malta – The World’s First Blockchain-regulated State.