Malta - consolidating the Blockchain Island reality

Three Bills on the regulation of cryptocurrency and DLT are tabled in Parliament

Dr. Priscilla Mifsud Parker | 25 Apr 2018

Blockchain and Funds

In a move that further consolidates Malta's drive to become The Blockchain Island, three Bills have been tabled in the Maltese Parliament with the objective of facilitating and regulating Digital Ledger Technologies (DLT) including Blockchain and Cryptocurrencies.

These Bills have been tabled for the first reading with the objective of having them approved expediently in order to ensure that, in the words of the Hon. Silvio Schembri Parliamentary Secretary for the Digital Economy, "Malta becomes the first Blockchain Island with a holistic regulatory framework".

These three Bills cover three key pillars of regulation required to holistically enable this industry in Malta:

1. The TAS bill, which sets out the regime for the registration of Technology service providers and the certification of Technology Arrangements.

2. The MDIA Bill - provides for the setup of the Malta Digital Innovation Authority (MDIA) that seeks to work closely with the Financial Services regulator (MFSA) to ensure that DLT companies are assisted, enabled, guided and regulated into setting up and operating;

3. The Virtual Currencies Bill – this shall set out the framework for ICOs and the regulatory regime on to the provision of certain services in relation to virtual currencies.  This bill would regulate intermediaries such as brokers, exchanges, wallet providers, asset managers investment advisors and market makers dealing in virtual currencies.

Hon. Silvio Schembri noted that once enacted, this legislation will be “unique, one of its kind in the world”. He also notes that a practical approach was taken by the drafters who founded these future legislative instruments on three principles: market integrity, consumer protection and financial stability.

Dr. Christopher P. Buttigieg, Director of the Securities and Markets Supervision Unit of the Malta Financial Services Authority, commented on how supervision shall be carried out under the new Bills: 

“We will not only be looking at the traditional way financial supervision is undertaken, governance, conduct and prudential, but through the MDIA we will also be looking at the technological aspect, so we will be ensuring that what the virtual token will be doing in terms of the smart contract is actually what it should be doing in terms of its whitepaper. This additional layer of regulation which would ensure a higher degree of investor protection and also market integrity.”

News of this historic milestone was warmly welcomed by our financial services specialists at Chetcuti Cauchi Advocates. Mr. Nicholas Warren, Senior Manager at Chetcuti Cauchi noted that: 

“We welcome the legislator’s holistic approach when regulating this area. The industry will benefit from regulation on cryptocurrencies which so far remains largely unregulated globally, as well as DLT platforms and their service providers. This will grant legal certainty not only to the many DLT-based business such as cryptocurrency exchanges which are already setting up or showing considerable interest in Malta, but also to clients dealing with businesses which have been licensed in Malta. This approach ensures that the Maltese license will become synonymous with the highest degree of investor protection whilst still allowing the flexibility required in this ever-changing industry.”

Our Fintech Practice 

Our lawyers and financial services specialists at Chetcuti Cauchi Advocates provide bespoke solutions to clients by combining the traditional legal fabric with new technologies. Led by Nicholas Warren, our Fintech practice strives to assist clients in this burgeoning and evolving sector of law, which is set to reshape the financial services sector as we know it. For more information please contact us on fsu@cclex.com.



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Key Contacts

Dr Priscilla Mifsud Parker

Senior Partner - Corporate, Trusts & Fintech

+356 22056422

Mr Steve Muscat Azzopardi

Senior Manager, Corporate & Fintech

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