Cryptocurrency and blockchain technology has been witnessing unprecedented growth over the last decade. Although digital currency is far from being accepted as a substitute for fiat currency, it is gaining wider applications in different sectors, with Bitcoin being the most popular cryptocurrency. Along with cryptocurrencies, it is blockchain technology that is growing at an equal or even at a faster pace, though their relationship has often been described as one between internet and email. Just as cryptoassets are being adopted more and more into the mainstream, blockchain, which is “heralded as the backbone of bitcoin and the internet of value, is already outstripping the internet in terms of its speed of development.”
The governments of different countries have accepted cryptocurrencies, although not in the same degree. There are countries like India, China and other East Asian countries who have put a ban on digital currency but there are others who follow a more liberal policy like Singapore, Japan, Luxembourg, Malta, Switzerland. For instance, Switzerland’s Zug region has come to be known as the “crypto valley,” as major crypto-related firms have been given a home in that region. However, among all these nations, Malta stands out, having grown into the “blockchain hub” of Europe, as it has put in place many favorable conditions for the crypto industry, which has also helped blockchain technology to grow manifold in the region.
Malta has earned several names like ‘crypto heaven on Earth,’ ‘blockchain island,’ ‘blockchain hub’ because of its liberal cryptocurrency and blockchain regime. It has recently become the first jurisdiction to adopt blockchain regulations, which has led major crypto exchanges like Binance, OKEx and ZBX to start their operations from the island. The Maltese government has been engaging in jurisdictional innovation to allow blockchain and cryptocurrency to flourish there, which other nations have been skeptical about. Last year in July, the Maltese government approved the passage of three bills that would facilitate the setting up of a regulatory framework for blockchain, cryptocurrency and Distributed Ledger Technology (DLT). “Malta is the first country to provide a regulated environment for operators in the blockchain, cryptocurrency and DLT space.”
Three laws that have been evolved in this regard, the first is called the Malta Digital Innovation Authority Act, which has set up the Malta Digital Innovation Authority to certify DLT platforms, mainly focused on internal governance arrangements. The second one is the Innovative Technology Arrangement and Services Act concerned with DLT certification and arrangements. The third law, the Virtual Financial Assets Act, provides the regulatory framework for controlling ICOs, cryptocurrency exchanges etc. The tax rates for corporates in Malta are the lowest among all the European Union nations (it is a meagre 5% compared to 22%, which is the average), which has further promoted the crypto industry. In most other countries, cryptocurrency lacks proper regulations or is completely banned, which makes Malta a favorable destination. Malta had also signed a declaration in October 2018 to promote blockchain use along with a few EU nations.
Recently in September, the Malta Financial Services Authority (MFSA) revealed the ‘Strategic Plan 2019-21’, a document that mainly focused on the role of the Malta Digital Innovation Authority (MDIA) in promoting development of the crypto industry in the region. There are certain regulatory challenges that the industry is facing currently, which the MFSA would try to resolve through its “Sup Tech” intelligence tools. The officials have remarked that “the innovations in blockchain and crypto technology present challenges in the prevention of money laundering and terrorism financing.” The intelligence tools would help regulators to detect frauds and adopt anti-money laundering steps, and in turn, help authorities to keep a check on licensed crypto service providers. Maltese prime minister Joseph Muscat has said, “The concept of cryptocurrencies excites me as it strikes at the heart of a key philosophical element that economy students are taught at the beginning of their course. Cryptocurrencies are the inevitable future of money.”
Therefore Malta, like various other nations, intends to hold on to its vision of establishing a crypto and blockchain-friendly ecosystem on the island with its relatively open regulatory policy. Malta has emerged almost like a leader in this field primarily because of its “top-down approach,” and the prime ministers’ vision has accelerated the establishment of a crypto-based new economy with a regulatory framework which entails crypto exchanges, brokerages, asset managers, traders etc. and provides legal assurance. The crypto community in the nation is quite optimistic regarding the future of blockchain with some major projects upcoming soon like OKEx’s and Maltese Stock Exchange’s “decentralized token exchange project.” The upcoming Delta Summit is something that the community is looking forward to as it would highlight the recent developments in blockchain and cryptocurrency, and Malta would be a step closer to its dream.