In a bid to stake out its claim as the go-to island for cryptocurrencies and blockchain technology, the parliament of the small European nation of Malta began the process of formalizing its burgeoning, though controversial, tech sector with the passage of three bills that establish a formal legal system for regulating cryptocurrencies, blockchain technology, and DLT or distributed ledger technology.
The Prime Minister of Malta, Joseph Muscat, sees the growing technology niche as more than a passing fad and potentially as the future of world commerce, among other things. The three bills introduced by the Maltese parliament passed unanimously. For anyone that knows a thing or two about politics, such consensus is truly a rare occurrence. Legislators designed the bills to make Malta’s market more attractive to companies developing technology in this sector, and their passage is with an eye towards growing Malta’s domestic economy with the introduction of this new niche.
Furthermore, Malta wants to be the pioneering nation in the area of regulation, hoping the lessons it learns can be applied elsewhere as blockchain, cryptocurrencies, and DLT technologies grow. The Junior Minister for Financial Services, Digital Economy, and Innovation, Silvio Schembri, has talked about the security that “legal certainty” gives developers of these technologies and identified this as one of the main concerns for firms that were serious about playing in this sector.
The first bill, the Malta Digital Innovation Authority Act (MDIA Act), created a new government agency called the Malta Digital Innovation Authority, a bureaucracy that will certify DLT platforms, among its other responsibilities. This agency will focus primarily on making sure that the businesses operating under the DLT banner are legitimate, based on certain benchmarks for certification, among other things.
The second bill, the Innovative Technology Arrangement and Services Act (ITAS Act), deals with the set-up and creation of cryptocurrency firms as well as establishing guidelines for DLT arrangements and certifications.
The third and last bill, the Virtual Financial Assets Act (VFA Act), establishes the regulatory framework for ICOs, cryptocurrency exchanges, and wallet providers.
For its part, the government of Malta stresses that it is taking a long-term position with respect to blockchain, cryptocurrency, and DLT technology. In addition to reading ICO’s white papers on their technologies, the government of Malta also wants to see them in action, a difference between the country’s regulatory scheme and that of some other nations. The laws are also flexible, allowing for the Maltese government to change them at a later date so that they best meet the needs of tech firms as well as the government itself. Of course, it is not lost on anybody that this is an entirely new area for most of these companies, many of which have faced no kind of regulatory environment whatsoever. The biggest fear that many entrepreneurs have whenever the government gets involved is that regulation will limit or kill innovation. Advocates for the new laws in Malta say that they will not limit innovation and, instead, will spur it as they help create a legitimate environment within which these companies can operate.
Maltas’s actions to lead the evolution of the cryptocurrency and blockchain world could be a strong signal that more countries could follow in their footsteps, opening up a greater chance of global adoption for innovators and companies in the near future.
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Malta Takes the Lead in the Cryptocurrency World was originally published in Data Driven Investor on Medium, where people are continuing the conversation by highlighting and responding to this story.