The government of Malta approved three new laws that will enable a regulatory regime for distributed ledger technologies in the country.
The 3 laws — Digital Innovation Authority Act, Innovative Technological Arrangement and Services Act, and the Virtual Financial Asset Act — are the first of their kind in the world.
Junior Minister for Financial Services, Digital Economy and Innovation, Silvio Schembri, announced the passing of the law, tweeting: “Malta, the first world jurisdiction to provide legal certainty to this space.”
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. #blockchainisland @JosephMuscat_JM
— Silvio Schembri (@SilvioSchembri) July 4, 2018
Joseph Muscat, Malta’s Prime Minister, echoed Schembri’s enthusiastic sentiments, expressing his desire for the country to innovate and be a pioneer in this space.
#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
What the Laws Are Intended to Do
Having a regulatory framework in place will enable crypto exchanges and blockchain companies to operate with clear understanding of the law and settle into a more certain environment, unlike the regulatory stress imposed on them in other countries.
The Digital Innovation Authority Act will create a new department, the Malta Digital Innovation Authority (MDIA), tasked with proving the credibility of Distributed Ledger Technology platforms, auditing smart contracts, handing out ‘technology arrangements’ (a new type of licence specific to entities like DAOs), and will have the power to suspend trading of a cryptocurrency on an exchange or stopping an ICO.
ICOs have proven to be a thorn in regulators’ sides for some time now, which has led to the weakened ICO market as of late. Malta’s new Virtual Financial Asset Act is aimed at applying the Financial Asset Test to determine the legitimacy of ICOs and their resulting digital assets, assessing whether or not they can be traded on a secondary market.
The Technology Arrangements and Services Act is tasked with registering technology service providers and certifying their technology.
Growing Enthusiasm for Malta
Malta passed these laws to put investors’ minds at ease. With regulations in place, companies can operate without the fear of uncertainty and intense regulatory pressure they’ve grown accustomed to in other countries.
Approval of these laws builds on a wave of companies moving to Malta. Among the movers are the top 3 crypto exchanges by volume, Binance, OKEx, and BigONE (which makes the country tops in the world for cryptocurrency trading by volume) and the cryptocurrency Tron. As these companies move into their new home they’ll bring with them an influx of investment and job creation.
To create a more blockchain-friendly environment, Malta is creating new university-level programs to educate its citizens to work in these new jobs and is also reforming the banking sector to facilitate the use of cryptocurrency.