How the Maltese Government Aims to Make Malta the World’s Blockchain Hub
According to Forbes, Malta, the European island between the North African Coast and the central Mediterranean Sea, has become a globally-recognized country for its business-friendly and innovative regulations in the blockchain and cryptocurrency industry.
On July 4, 2018, the government passed 3 blockchain and cryptocurrency related bills into law. Silvio Schembri, the Junior Minister for Financial Services, Digital Economy, and Innovation in Malta, believes that the recent passing of the laws makes the European island one of the first countries to provide a clear regulatory framework for the blockchain and cryptocurrency industry.
Crypto-Friendly Malta to Become the World’s New ‘Blockchain Island’
According to an interview with Forbes, Schembri said that Malta is known globally as the world’s blockchain island because of the Maltese government’s approach to the emerging technology. He noted that other countries’ fears rise from their short-term perspectives. Malta, on the other hand, sees the advantages that digital ledger technologies can offer in the long-run.
Schembri went on to give a clear example of regulations concerning initial coin offerings and white papers.
“Presently, other jurisdictions are are looking at what is written in the white paper to see if it is a certified document,” said Schembri. “However, it is the technology behind the white paper that matters the most and tends to be overlooked. If the technology is flawed, the product won’t deliver what is started in the white paper. We are looking heavily at the technology behind these blockchain-focused companies.”
Schembri mentioned that Malta applies high-level principles that project European Union laws onto the country’s laws. Malta looks at market integrity, consumer protection, and industry protection. In regards to the bills recently passed, Schembri commented that all their laws are based on these three key principles. The goal is to ensure that there is a high level of legal certainty so that all parties are aware of the rules and regulations despite cryptocurrencies and blockchain technology operating in a highly unregulated space. By adopting a principles-based approach as opposed to a rules-based approach like many other jurisdictions, Malta has therefore attracted large cryptocurrency companies and startups like Binance who are eager to help the country’s economy grow.
The largest benefit for any cryptocurrency or blockchain-related company is business and cryptocurrency-friendly regulations. The Maltese government’s openness and welcoming attitude to blockchain and the cryptocurrency industry is a significant contrast to the harsh regulations from many other countries. The government is open-minded and is willing to consider new changes and disruptive technologies.
Malta also has a very competitive tax system. The government is interested in building a strong ecosystem that has many advantages for businesses looking to develop in the country. Schembri also commented that the European island’s geographical location is in the center of the Mediterranean Sea and in close proximity to both Africa and Europe, which gives it unique access to multiple markets.
Anyone Keen to Join Malta’s Crypto Community is Welcome
When it comes to launching ICOs in Malta, Schembri mentioned that any organizations that are keen on joining the Malta blockchain community are welcome.
“If a company would like to issue an ICO here, that company would be allowed a total of 6 months to get in line with the bills we have passed,” said Schembri. “This will be extended to one year for crypto exchanges. This allows operators time to get in line with what we are proposing.”
These bills will come into effect in October 2018. Malta is also hosting the DELTA summit in October 3 to 5, 2018. It will be the first government-backed blockchain conference in Malta and will include key companies like Binance, OKex, and Neufund, who will be moving and operating in Malta. Maltese government officials will also be present at the summit to network and process new applications from blockchain and cryptocurrency startups.
Malta Believes Legislation is Important for Growth
While many in the cryptocurrency community are concerned that regulations will hinder the industry’s growth, Schembri, however, mentioned that the country is enacting regulations with good intentions. He commented that the governemnt did not need to amend any earlier legislation to accommodate for the new laws, whereas many other countries have to modify their existing laws to account for cryptocurrencies and blockchain technology.
The modification of laws, however, is not so future proof since emerging and disruptive technologies are always just around the corner. Furthermore, the industry is so dynamic that governments need to consider the emerging changes of other technologies as well. Schembri was pleased to state that the Malta Digital Innovation Authority is also assessing artificial intelligence, internet of things (IoT), and big data. They are looking at potential ethical issues these new technologies may raise as well.
The Maltese Government believes that their regulations will not stifle any innovation but rather address key concerns like money laundering and terror financing. Schembri mentioned that many countries often use the excuse that cryptocurrencies are affiliated with the black market and black economy, however, this is a poor argument since money laundering occurs with fiat currency as well. He goes on to state that fiat currency cannot be tracked whereas cryptocurrencies can. While Schembri noted that cryptocurrencies can be used for harmful purposes, clear and proper regulation should help solve these issues.
Ultimately, Schembri wants the cryptocurrency and blockchain community to know that they are welcome in Malta. Malta currently has one of the best legislative frameworks for cryptocurrencies, and the government has a positive can-do attitude.
“We believe in this industry,” said Schembri. “Blockchain is the future and the future is digital.”
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