Malta enacts world's first blockchain regulatory framework11 September 2018
LAWS ESTABLISHING THE FIRST BLOCKCHAIN REGULATORY FRAMEWORK IN THE WORLD HAVE BEEN APPROVED BY MALTA’S PARLIAMENT
In July 2018, the Maltese Parliament approved three Bills in a move to provide regulation and legal certainty for users of cryptocurrencies and Distributed Ledger Technology (DLT), such as blockchain, in a previously unregulated market. The Digital Economy Secretariat described the three laws as the first of their kind in the world.
The Malta Digital Innovation Authority Bill
The first bill presented provides for the establishment of the Malta Digital Innovation Authority. One of the Authority’s key functions will be to certify platforms that use DLT, such as blockchain and cryptocurrency platforms. Certified surveyors within the Authority will be responsible for verifying that information being logged on such platforms, such as transfers of currency to individuals or companies, is genuine. This will provide legal certainty to users and establish a wider sense of trust in the system, while also eliminating the need for middlemen such as banks, thus making operations more efficient.
The Technology Arrangements and Services Bill
The second bill establishes a system for the registration of Technology Service Providers and the certification of Technology Arrangements through system administrators and system auditors.
The Virtual Financial Assets Bill
Finally, the Virtual Financial Assets Bill lays out a framework for Initial Coin Offerings (ICOs) and regulations regarding the provision of services in relation to virtual currencies.
Intermediaries subject to the virtual currency Bill include brokers, exchanges, wallet providers, asset managers, investment advisors and market makers dealing in virtual currencies.
Parliamentary Secretary, Hon. Silvio Schembri, commented on the overwhelming response and constructive feedback that has been received both from interested companies as well as international regulators.
Several major players in the global blockchain market have already announced their plans to establish operations in Malta, even prior to the approval of the three Bills. Malta has recently been dubbed the “Blockchain Island” due to the government’s favourable stance on blockchain and cryptocurrencies, and its efforts to establish a regulatory framework for the industry.
Parliamentary Secretary for Financial Services, Digital Economy and Innovation, Silvio Schembri, commented on the approval of the Bills, describing it as a step that will put investors’ minds at rest, since companies are now being provided with the necessary tools to operate in a regulated environment.
“This will put minds at rest for investors and whoever uses this new technology that is likely to change the world. I am optimistic that further companies will choose Malta to operate from with a system that offers stability and that will eventually result in further economic growth.” (Parliamentary Secretary for Financial Services, Digital Economy and Innovation, Silvio Schembri)
Corrieri Cilia is pleased to see that Malta has been at the forefront of introducing legislation that is aimed at fostering technological innovation, whilst at the same time providing legal certainty in a sector that is complex, ever-changing, and open to abuse if left un-checked.
At the core of our principles is the understanding that the world’s legal systems must evolve alongside technological innovation. To this extent, Corrieri Cilia provides assistance in the fields of ICOs, ITOs, and blockchain businesses, offering advice on structuring, mandatory regulation, voluntary recognition, and related tax, legal & business advisory.
For further information or advice regarding blockchain, cryptocurrencies, or ICOs, please contact:
Silvio Cilia, Partner or Michael Gauci, Associate
Corrieri Cilia, Malta
t: +356 2017 3350
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