While jurisdictions and legal systems around the world are expressing concern about cryptocurrencies, Malta is promulgating legislation that should give exchange owners and users certainty about the future. The rules are considered to be a one-stop-shop package that will deal with the establishment of a new authority, regulated exchanges and license Initial Coin Offering (ICO) companies and related business. The main aim is to offer legal certainty to the industry.
Following the plans of crypto-giants to relocate to Malta, many others are following suite, and the tiny Mediterranean island is expecting to see a surge in licensing applications for such related-businesses.
Every other jurisdiction around the world is currently experiencing a lacuna in the regulatory framework, absence of definitions and lack of supervisory expertise on the subject. In fact, all regulators worldwide are applying existing securities and financial market legislation to Initial Coin Offerings (ICOs) and issue guidelines as to the risks involved and the applicability of such laws on ICOs.
Needless to say, this does not work smoothly, and it is more than evident that ad hoc legislation is the only way forward. In fact, the Maltese government is doing precisely this at the moment and has embarked on this pioneering project in 2018 in order to become the first jurisdiction worldwide to regulate ICOs and Blockchain Technology.
B. PROPOSED LEGISLATION
In order to further render Malta a natural jurisdiction of choice for ICOs, the Maltese Government has recently tabled three Bills in Parliament in order to thoroughly regulate the DLT and ICO business.
In essence, the Bills presented in Parliament are the following:
All Bills revolve around the concept of Distributed Leger Technology or decentralised ledger technology, "DLT", and define this technology as follows:
DLT, "distributed ledger technology", "decentralised ledger technology" means a data base system in which information is recorded, consensually shared, and synchronised across a network of multiple nodes, or any variations thereof.
The Bills describe a "DLT Asset" as:
that is intrinsically dependent on, or utilises, Distributed Ledger Technology.
C. THE BILLS
1. MALTA DIGITAL INNOVATION AUTHORITY ACT, 2018
This Bill sets-up the Malta Digital Innovation Authority ("the Authority") and hence establishes the roles and responsibilities of the Authority vis-à-vis DLT and ICO businesses.
The main duties of the authority shall be to address the development in Malta of all innovative technology arrangements and innovative technology services in order to achieve the principles and objectives of the Act.
It shall be the duty of the Authority to exercise such supervisory and regulatory functions in the field of innovative technology arrangements and innovative technology services as may from time to time be assigned to the Authority by any special law.
The Authority shall, among others:
The Authority hence will act as the supervisor of blockchain regulation. It is expected that during the course of time, the Authority shall issue further policies and ad hoc regulation in order to substantiate the laws and keep abreast with the developments of the industry. To continue reading click here