IN542 - The Maltese Parliament is Putting in Place the Foundations to Become the 'Blockchain Island'
Malta has, for several decades, been a country committed to new technologies and to welcoming investment in such sectors.
With blockchain it is no different.
At the end of June 2018, the Maltese Parliament unanimously approved three Bills:
- The Virtual Financial Assets Bill.
- The Technology Arrangements and Services Bill.
- The Digital Innovation Authority Bill.
Each of these establishes the regulatory framework for the blockchain sector.
The Parliamentary Secretary for Financial Services, Digital Economy and Innovation, based in the Office of the Prime Minister, announced this by stating;
“Today the Maltese Parliament unanimously approved 3 bills on DLT/blockchain, a 1st in the World. We are honored to have driven these bills.”
Investors will now be able to operate in a regulated environment.
What this Means for Malta and Blockchain Companies
This new legislation confirms Malta’s commitment to these new technologies and willingness to welcome companies operating in this sector to the island. Malta had already proved to be a cryptocurrency-friendly jurisdiction and has already attracted some of the largest cryptocurrency exchanges in the world to set up their offices on the island.
The Legislation in More Detail
Considering each piece of legislation in more detail:
- The Virtual Financial Assets (VFA) Bill provides the framework regulation in relation to initial coin offerings (ICOs) and virtual currency exchanges. According to this law, no ‘issuer’ will offer a virtual financial asset to the public in or from Malta or will be able to apply for a virtual financial asset’s admission to trade on a Distributed Ledger Technology (DLT) Exchange, unless such ‘issuer’ drafts a whitepaper. The’ issuer’ will be required to appoint a VFA agent, who must be registered with the Malta Financial Services Authority.
The authorities in Malta will create a register of all registered VFA agents.
The definition, within this law, of a "virtual financial asset" or "VFA" is any form of digital medium validation that is used as a digital medium of exchange, unit of account, or store of value and that is not electronic money; a financial instrument; or a virtual token. The VFA Act imposes the requirement to hold a licence for all persons who provide or present themselves as providing a VFA service in or from Malta.
- The Technology Arrangements and Services Bill relates to the registration and certification of technology service providers.
This bill covers the regulation of designated innovative technology arrangements. It will be the mechanism by which blockchain-based enterprises are recognised as such under the law.
The Authority will register such individuals and/or legal entities as providing various innovative technology services as specified in the registration. Registration to provide one type of service will not preclude registration of the same individual to provide other types of service.
The authorities will create and maintain a register of all the certificates granted.
- The Malta Digital Innovation Authority (MDIA) Bill establishes the Malta Digital Innovation Authority and lays down the foundation of rules for the internal governance of cryptocurrencies and blockchain.
This authority will be responsible for the development and implementation of the guiding principles relating to technological innovation, also covering distributed and/or decentralised technology. It will undertake regulatory functions regarding innovative technology, arrangements and related services.
The MDIA will be responsible for certifying innovative technology arrangements and service providers in the field of Distributed Ledger Technology.
The regulations adopt a granular approach, particularly with respect to:
- Control of assets
The three Bills also specify penalties for failure to comply with the provisions of the regulations and any relevant appeals.
The foundations have been set… Welcome to the Blockchain Island!
If you would like further information regarding blockchain, the approach taken by the Maltese Government and the opportunities this presents, please contact the Dixcart office in Malta: firstname.lastname@example.org or your usual Dixcart contact.