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Words by Dr. Jonathan Galea

I’d like to start o this piece with some good news and bad news. The good news? One of the greatest technological shifts in our lifetime is taking place right now, and Malta is one of the leading players in this revolution.

As of the 1st of November 2018, the new framework regulating DLT technology was promulgated. is entailed the introduction of three Acts covering the fundamental aspects underpinning this ever-changing and innovative industry. Several jurisdictions have been, to a greater or lesser extent, working towards embracing DLT and participants therein. Malta has recognised the need to introduce regulations targeting the financial aspect of this technology, but it has not stopped there; it has also given due attention to proper technical development standards.

Dr. Jonathan Galea

By way of a quick overview, this new framework consists of three legislative acts that essentially cover three core aspects:

  • The Malta Digital Innovation Authority (MDIA) Act covers the establishment of a regulatory authority which is dedicated towards the supervision and certification of DLT platforms and smart contracts, ergo technology arrangements;

  • the Innovative Technology Arrangements and Services (ITAS) Act covers the setting-up of a registration & certification mechanism for technology arrangements which shall be certified by approved Systems Auditors; and

  • the Virtual Financial Assets (VFA) Act regulates service providers in the field, such as cryptocurrency exchanges, as well as those conducting ICOs, ensuring consumer and investor protection in an area where legal uncertainty has been rampant and has led to certain notable past incidents.

This three-pronged approach places Malta in a very favourable position when compared to its peers, with some notable names choosing Malta as one of, or sole, bases of operations. is is due to the fact that the Maltese DLT framework sought to eliminate regulatory uncertainty and provide the perfect legal ecosystem for companies to thrive and prosper without stifling innovation.

Even as the paint is still drying on this novel framework and its full implementation still being underway, there’s no signs of stopping in the drive for further innovation. A fourth bill is in the making, proposing the creation of innovative technology foundations, a form of legal structure for technology arrangements with the ultimate aim being of solving the question of legal liability in relation to distributed ledger systems.

I mentioned the good news earlier on. What about the bad news? Well, the truth is that very, very few are aware of this great change that is taking place, and fewer still are actively involving themselves in it. That makes me sad and exhilarated at the same time. Sad, because it is highly unlikely we’ll see such a change again in living memory. Exhilarated, because I’m proud that Malta is leading the charge, and prouder still that my efforts to advocate this technology since 2013 are finally starting to bear their fruits.

Dr. Jonathan Galea is the Managing Director of Blockchain Advisory, a premium regulatory and technical consultancy outfit based in Malta, providing services vis-a-vis the DLT Regulatory Framework such as licensing, auditing, and all other matters to get your business up and running within a regulated environment.