10 July, 2018
The Parliament of Malta has passed the first comprehensive laws to regulate activity related to blockchain, distributed ledger technology (DLT), and cryptocurrency. The small archipelago nation has already become widely known as a crypto-friendly space, but its renewed commitment to supporting the use and development of these technologies has confirmed its position as the world’s first “blockchain island.”
As reported by Malta Today, three bills were passed into law last week:
The first law, called the “Malta Digital Innovation Authority Act,” covers the certification of DLT platforms by establishing the Malta Digital Innovation Authority. This law outlines the responsibilities of the Authority to certify DLT platforms and thereby provide legal certainty to users as well as ensure the credibility of a given platform.
The second law is known as the “Innovative Technology Arrangements and Services Act,” which provides a regulatory framework for the setting up of crypto exchanges and other companies that operate in the cryptocurrency market.
The third law, known as the “Virtual Finances Assets Act,” establishes a framework for regulating initial coin offerings (ICOs), cryptocurrency exchanges, wallet providers, and other similar entities.
Malta’s Junior Minister for Financial Services, Digital Economy and Innovation, Silvio Schembri, noted that the country is the first world jurisdiction to provide legal certainty to the blockchain, DLT, and crypto space. In a comment to Forbes, Schembri explained:
“When we started looking into what was needed for the blockchain industry to flourish, we understood early on that the serious operators wanted legal certainty. […] Operators fear that one day a government in that particular legislation will tell them they aren’t within the law—even though there are currently very few laws in place. This is creating legal uncertainty and we wanted to change this.”
Due to the existing blockchain- and crypto-friendly environment in Malta, several major cryptocurrency exchanges have already set up operations in the country—Binance, OKex, and BitBay, to name a few. There is even an initiative to improve the Maltese Public Transport Service using distributed ledger technology, and the Malta Gaming Authority recently issued a document with guidelines and standards for blockchain and cryptocurrency applications in the gaming industry.
Dr. Abdalla Kablan, advisor on blockchain and AI for the government of Malta, noted that the solid regulatory framework put in place will “protect consumers, safeguard investors and will allow for more transparency and visibility. […] Regulation will be done without stifling innovation, which is the main driver for economic growth. Think about it as a regulation of engineers by engineers.”
To that end, the Maltese government plans to take a “principle-based” approach that leaves an opening to tailor the laws based on the changing technology landscape.
With the government’s attitude of embracing blockchain, DLT, and cryptocurrency, as well as these newly established comprehensive regulatory frameworks, Malta is bound to serve as a safe and welcoming space for blockchain and crypto operators for a long time to come.
Image credit: “Marsaskala Bay in Marsaskala, Malta” by Frank Vincentz via Wikimedia Commons.