Malta is now officially the first crypto island. This comes after the country’s parliament passed three bills that put in place a legal framework for the cryptocurrency space.
Only last week, parliament unanimously passed the three bills as the country tries to position itself as a hub for the new technology. Cryptocurrency businesses such as Binance have been readying to set up in Malta amid hostility and uncertainty in other jurisdictions.
Digital Innovation Minister Silvio Schembri has previously said the regulations were needed to clear the uncertainty surrounding the sector. We understand serious operators need regulatory certainty, Silvio told Forbes after the bills were passed into law.
https://twitter.com/SilvioSchembri/status/1014540179808321537
“The 3 Bills that will regulate DLT have been approved by Parliament and enacted into law. Malta , the first world jurisdiction to provide legal certainty to this space,” Schembri tweeted.
The laws will make Malta a “hub for global market leaders,” in blockchain Joseph Muscat, the Maltese Prime Minister tweeted.
“Malta is officially the first country worldwide to have holistic legislative framework regulating blockchain & #DLT technologies. We will be the #global hub for market leaders in this new sector. Now for the implementation of BlockchainIsland,” Muscat tweeted.
#Malta 🇲🇹 officially the first country worldwide to have holistic legislative framework regulating #blockchain & #DLT technologies. We will be the #global hub for market leaders in this new sector. Now for the implementation of #BlockchainIsland -JM @SilvioSchembri
— Joseph Muscat (@JosephMuscat_JM) July 4, 2018
Despite this, there is still a lack of regulation in much of the rest of the world with investors holding off possible investments into the sector over the uncertainty.
The Laws
One of the laws, the Digital Innovation Authority Act will establish internal governance arrangements and will put in place an authority to certify Distributed Ledger Technologies. The body will be known as the Malta Digital Innovation Authority and its functions will be carried out by a Board of Governors. Stephen McCarthy has been appointed to serve as the first CEO.
The Innovative Technology Arrangement and Services Act is concerned with the certification of DLT platforms such as cryptocurrency exchanges.
The Virtual Financial Assets Act regulates aspects such as ICOs as well as cryptocurrency exchanges and wwallet providers
ICOs to come under more scrutiny
Companies raising capital through ICO’s will now be required to provide detailed whitepapers with a comprehensive description of the project. They will also be required to disclose their financial history.
The law also provides a three-stage process for the classification of virtual assets as either securities or tokens.
The Maltese government has itself taken steps to involve blockchain technologies in its governance structures. It has previously explored the possibility of using DLT in the public transport system in partnership with Omnitude. A feasibility study on the use of blockchain technology to record academic certificates has also been previously conducted.
Malta has been a friendly nation for cryptocurrencies with the likes of OKEx and Binance having been planning set base even before the law came into place.
Binance has already set up a bank account in the island.
Malta is a member of the European Blockchain Partnership, an initiative to create a conducive environment for the use and development of blockchain technologies among member states and in line with European Union Laws.
EU bloc members are expected to follow in the path taken by Malta to help give more clarity on the sector.