Malta Lays Ground for Crypto Regulations
The EU state aims to become a “Blockchain island”.
Malta`s government has approved three crypto-related bills aimed at establishing legal certainty for blockchain and cryptocurrency businesses, the local media reported on Tuesday. .
The Parliament started debating the legal framework on Wednesday evening:
“This evening`s Parliamentary session is historical. Malta will expose to the world its determination in allowing this industry to grow within its ecosystem,” Silvio Schembri, Malta`s parliamentary secretary for financial services, digital economy and innovation and one of the law package authors said in a press-release.
Silvio Schembri (second on the right), Malta`s parliamentary secretary for financial services, digital economy and innovation during a press-conference in the Parliament/Image source: Government Department of Information.
The Digital Innovation Authority Bill, Technology Arrangements and Services Bill and Virtual Financial Assets Bill were approved after a public consultation called “Malta: a leader in Distributed Ledger Technology regulation”. DLT, or Distributed Ledger Technology, is the software behind the blockchain - technology of cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH).
“Fintech, blockchain and virtual currencies will be the base of the new economy in a few years. We will be pioneers in these sectors”, Malta`s Prime Minister Joseph Muscat explained last month during the process of public consultation.
The Digital Innovation Authority bill will create regulatory body for supervising and certifying the DLT companies. The government agency will have several other functions, including proposing new regulations and educating people about blockchain.
The Technology Arrangements and Services bill will “set out the regime for the registration of Technology Service Providers and the certification of Technology Arrangements”, the government explained.
The third draft, Virtual Financial Assets bill, will regulate Initial Coin Offerings (ICOs) and cryptocurrency trading by establishing rules for brokers, exchanges, wallet providers, asset managers, investment advisors and market makers. The Mediterranean island uses the term virtual currency (VC) in all three laws.
Binance, the largest cryptocurrency exchange by trading volume as per Coins.Online data, and OKEx, also one of the top players, announced plans for opening offices in Malta last month. Both companies see the EU member state as a “blockchain-friendly” nation.
“The feedback [from the three laws] so far has been tremendous - keeping in mind the companies that have already announced their decision of relocating and opening offices here. These Bills will provide them with the legal certainty these companies are looking for,” Silvio Schembri, who has met with Binance and OKEx`s chiefs, explained while presenting the three drafts to Parliament on Wednesday.
Joseph Muscat speaking during the opening ceremony of Malta’s Presidency of the Council of the European Union, Brussels, 2017/Image source: © European Union, 2017
Malta has been setting foot in the crypto world at a fast pace after Prime Minister Joseph Muscat revealed his ambitions for a “blockhain island” last year. The EU member is also subject to criticism for its lack of anti-money laundering (AML) regulation and practices that allow tax avoidance and covering of real owners.
“I believe Malta is breaking EU money-laundering laws, and the European Commission has been idle”, the German Green party Member of the European Parliament (MEP), Sven Giegold, told Deutshe Welle.
The country presented its first-ever AML strategy only days before the final vote in the European Parliament (EP) on new crypto rules. The EP has adopted the new Anti-Money Laundering Directive, which established AML rules for crypto exchanges and wallets, including revealing of real owners.
Earlier, the MEPs urged the European Commission to launch money laundering investigation into the murder of investigative journalist Caruana Galizia in Malta in October 2017. Galizia was one of the few journalists who investigated corruption and money laundering practices in the smallest EU member state.