Malta Block Chain

Introduction

Currently, the world is undergoing major changes in the technological field, one of the resources that has disrupted the market is the Blockchain Technology, which consists of a digital information chain shared between many parties, this chain can only be updated if  most participants in the chain validate the information and when it is part of the chain, it can never be deleted. More specifically, it is a blockchain, where each block has a set of unique transactions with a cryptographic footprint called "hash." Each block is a series of transactions validated and grouped in a specific way where the information remains visible and accessible, but cannot be modified, since the blocks are not independent of each other.

Today, more than 100 projects based on blockchain technology have been created and are being carried out to transform government systems in more than 30 countries. According to research conducted by MyungSan Jun for the "Journal of open Innovation: Technology, market, and Complexity." Blockchain is a technology directly related to social organization; Because unlike other technologies, blockchain relies on a consensus algorithm mechanism with human intervention to function. Once that consensus is given it cannot be modified or eliminated. Thus creating, according to Myung San, an absolute law that cannot be violated or broken. This specific feature makes it possible to implement a social technology that can replace some existing social structures such as bureaucracy.

Thanks to all these changes and improvements that blockchain technology can offer and given its high capacity to influence, the Government of Malta, proposed strategies to implement this technology in social and economic fields for promoting improvements and innovations within society, attract Fin-Techs companies to the market.

Business Needs

Malta has been acting as a world pioneer in the cryptocurrency and blockchain industry in recent years. Malta Blockchain provides investment opportunities and incentives that allow it to become the world's first Blockchain island.

The purpose of the Maltese government with Malta Blockchain, goes beyond just regulating the use of cryptocurrencies. Also, they plan to implement blockchain in other technologies nationwide, such as the land registry or the national health registry. The goal is for Malta to promote a change at European Union level, so that they can become the most advanced and best connected continent thanks to the blockchain.

On the other hand, the Maltese government has been working out different ways to apply blockchain technology to the public service. In early 2018, Malta partnered with Imnitude to improve the transport system using blockchain. Also, they have carried out a feasibility study using blockchain technology to register academic certificates, among other plans.

However, due to the fact that this industry is developing rapidly every day, the Maltese government is being cautious about how to regulate the area without imposing unnecessary restrictions, hoping that Malta Blockchain will be a worldwide success.  In April 2017, the Prime Minister of Malta, Joseph Muscat, revealed that the cabinet approved the first draft of a national strategy to promote blockchain, the Malta Blockchain Strategy. This Malta Blockchain plan has the sole purpose of making Malta one of the first countries in the world to adopt blockchain. (Chetcuti Cauchi, 2017).  To achieve it, the country makes use of its strategic geographical position, climatic conditions, strong skills base and entrepreneurship to serve as a test bench for new sectors and foreign companies to test their new technologies and products locally. Well, by becoming world leaders within this industry, Malta Blockchain hopes to revolutionize the perspective that governments will adopt towards such innovative technologies.

Blockchain in Malta

Malta has been the first country to pass new operational regulations in cryptocurrencies and blockchain. In July 2018, the Maltese parliament voted and unanimously approved three laws that will help the island achieve its goals of becoming the blockchain island. The bills include the Maltese digital innovation authority law, the innovative technology services and plans law and the virtual financial assets law.

The projects are designed to make Malta an access point for blockchain and cryptocurrency companies. With this, the government hopes to attract new businesses and investors to the island. Also, in August 2017 the first bitcoin ATM was installed, for this reason the new regulations became necessary. Next it is detailed on each one of them.

Law of the Malta Digital Innovation Authority (MDIA): This law authorizes the creation of an autonomous and independent entity, which will be known as the Malta Digital Innovation Authority. This entity will be responsible for supporting the development and implementation of principles consistent with the vision, skills and other qualities related to technological innovation for the island. It will regulate blockchain technology and smart contracts, promote government policies, educate and encourage advances, use and implementation of innovative technology.

Law on Innovative Technology Services and Plans:

It will be in charge of establishing the necessary regulations so that the Malta Digital Innovation Authority can operate with cryptocurrencies. That is, the ITAS law establishes the definition criteria for innovative technology agreements (ITA) and innovative technology services (ITS). The bill establishes that an agreement or service that has the characteristics of an ITA or ITS is eligible to be recognized as such by the Malta Digital Innovation Authority, subject to the Authority's written decision on eligibility. The law, as proposed, would also introduce a series of guiding principles on the behavior of STI providers in the course of their operations. By introducing the registration and certification procedures, as well as expressly establishing the definition criteria for ITAs and ITSs, the ITAS Act is instilling a much-appreciated confidence in the minds of potential investors.

Law of Virtual Financial Assets:

Its objective is to regulate the field of Offers of Virtual Financial Assets. According to the definitions of the law, a cryptocurrency or ICOs can be classified as a virtual financial asset and the law provides a comprehensive set of rules that will protect consumers, investors and support the growth of the industry providing financial strength and integrity.

Thanks to the implementation of these laws, three of the global cryptocurrency exchange platforms (Binance, OKEx and Bitbay) have moved their operations to the island. This implies a rapid and positive acceptance of regulations by technology companies - financial, returning to Malta and an attractive destination for these types of companies.  On the other hand, the Malta Stock Exchange (MSE) announced an alliance with Binance, the world's largest cryptocurrency exchange platform, and Neufund, a blockchain-based fundraising platform. , with the objective of creating a global, regulated and decentralized Stock Exchange in which shares can be traded.

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