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Witnessing the digital breakthrough

Three New Bills At Once. Malta Urges To Become The “Cryptostate #1”

31 August 2018 22:15, UTC
Three New Bills At Once. Malta Urges To Become The “Cryptostate #1”
By Denis Goncharenko

Malta has always been the sphere of political and economic interests for many countries and organizations. In the 20th century this country gained independence, becoming a parliamentary republic. After that, Malta demonstrated its bright demographic and industrial growth. The most important spheres of state revenues are tourism, manufacturing, international trade and financial services. Moreover, Malta is a major international center for learning English due to the government investments in the educational system. It is also attractive for the film industry — the island often serves as a movie shooting location.

Here are some interesting facts about Maltese economy:

  • The World Bank and the IMF consider Malta to be a country with an advanced economy and high level of income.

  • In 2014 the World Economic Forum nominated Malta to be an "innovation-oriented" state.

  • There are numerous offices of large legal advisers in Valletta, the capital of Malta, which is often called the "city of lawyers" for a joke.

  • As for worth mentioning disadvantages there is energy, which is produced from imported oil, with practically no renewable sources used in Malta. For today, it is one of the acutest state problems.

MFSA, the Malta Financial Services Authority, is the official financial regulator in Malta. This organization successfully attracts businesses to the country, including the gaming industry, air and water fleet registration, funds and so on. Fiduciary services, as well as trust management, are one of the island’s economic strategy components.

Key milestones in the development of Malta crypto industry:

In August 2017, Joseph CUSCHIERI, the Chairman of the Malta Game Authority (MGA) at that time, announced their plans to implement cryptos and blockchain into the gambling system.

A large-scale blockchain summit held on the island in February 2018.

On March 23, Changpeng ZHAO, the CEO of Binance, declared the opening of the office in Malta. Joseph MUSCAT, the Prime Minister of Malta, tweeted about his support for this decision and expressed his readiness to cooperate on many projects. Following the Binance, TRON project also expressed the intention to open an office on the island.

On March 24, the Cabinet of Ministers presented 3 bills designed to regulate the blockchain industry in Malta. A strategic plan was developed to establish the state as a "blockchain-island".

April 2018. OKEx announced the opening of its office in Malta.

April 11, 2018 — the Declaration on the establishment of "European Blockchain Partnership” was signed, where Malta took part as well as other 21 countries.

July 4, 2018 — the Bills were adopted by the Parliament. It was reported by Malta Today. Silvio SCHEMBRI, the Junior Minister for Financial Services, Digital Economy & Innovation in the Office of the Prime Minister, confirmed this fact in his Twitter and expressed confidence in the success.

In July, the Government of Malta and Binance began their cooperation to create the first regulated crypto bank.

August 2018. The University of Malta announced the creation of the fund to study blockchain technologies.

In the same month, ZB.com reported on its intention to open an office in Malta.

Andreas VLACHOS, Academic Coordinator Officer of the Blockchain Initiative at University of Nicosia, studied the official documents and created a brief list of comments.

Comments:

  • Focusing on the term “Distributed Ledger Technologies” (DLT).

  • Establishment of National Blockchain Taskforce.

  • Presentation of a conceptual framework through which DLT Platforms can be subject to certification in Malta. This framework also takes into account the need to oversee the principal service providers to DLT Platforms. Separately through the MFSA, the framework extends to issuers of ICOs and certain service providers dealing in virtual currencies.

Contents of the proposed legislative documents

Malta Digital Innovation Authority (MDIA) Bill — focused on the establishment of the authority and internal governance arrangements including the composition of the Board of Governance.

Objectives:

  • to promote governmental policies that favour the development of Malta as a centre for technological innovation and in particular deployment of Digital Ledger Technology;

  • to promote and facilitate the advancement and utilisation of DLT and its design and uses;

  • to promote education on ethical standards and legitimate exploitation, use and creation of technology in particular digital ledger technology;

  • to safeguard the reputation of Malta taking into account Malta’s international commitments and to collaborate with other states and international organisations in implementing the best standards in the sector;

  • to protect users and consumers, in particular when either directly or indirectly they will interface or use digital ledger technology to ensure adequate standards aimed at meeting their legitimate expectations;

  • to harmonise practices and where applicable facilitate the adoption of standards in the digital ledger technology sector in Malta in line with international norms and with those of the European Union in particular;

  • to assist the competent data protection authorities in safeguarding the data protection rights of data subjects and assist other competent authorities for the protection of vulnerable persons and the promotion of competition and choice;

  • to promote and if required enforce ethical and legitimate criteria in the design and use of digital ledger technology, and any application, software or derivative nascent from it or intrinsically part of it or connected to it, as well as quality of service and security;

  • to promote transparency and auditability in the use of digital ledger technology, and any application, software or derivative nascent from it or intrinsically part of it or connected to it;

  • to promote legal certainty in the application of laws, in a national and cross-border context, and legal principles.

TAS Bill

The objective is to set out the regime for the registration of Technology Service Providers and the certification of Technology Arrangements. This framework will be applicable to:

  • Technology Arrangements, Auditors of Technology Arrangements related smart contracts;

  • Administrators of Technology Arrangements.

It will also specify certain Private Law issues relating to Technology Arrangements.

VFA Bill

The objective is to set out the framework for ICOs and the regulatory regime on to the provision of certain services in relation to cryptocurrencies. The intermediaries subject to the VFA Bill include brokers, exchanges, wallet providers, asset managers, investment advisors and market makers dealing in cryptocurrencies.





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