Issue link: https://maltatoday.uberflip.com/i/1009910
maltatoday | WEDNESDAY • 1 AUGUST 2018 11 ANALYSIS www.creditinfo.com.mt info@creditinfo.com.mt Tel: 2131 2344 Your Local Partner for Credit Risk Management Solutions Supporting you all the way Banks will always tread carefully as these are new technologies which have to be tried and tested Blockchain – The new regulatory framework THE Malta Chamber of Commerce, Enterprise and Industry in collaboration with EMCS organised an in- formation session on the new Blockchain legislation which was recently approved by the Maltese parliament. Frank V. Farrugia, presi- dent of the Malta Cham- ber of Commerce, Enter- prise and Industry, said that Blockchain has the potential to create new foundations for global economic and so- cial systems rather than be a disruptive force towards tra- ditional business models. "Blockchains promise to provide corporations with efficiencies in global supply chains, financial transac- tions, asset ledgers and de- centralised social networks" Farrugia said. He welcomed the recently approved regulatory frame- work which he called a first step in the right direction. "Malta is among the first countries to implement reg- ulatory frameworks to attract new investments as it has done in the past in financial services, aviation, pharma- ceutical companies and re- mote gaming" he said. Parliamentary Secretary for Financial Services, Digital Economy and Innovation Sil- vio Schembri said that Malta became the first world juris- diction to offer a holistic ap- proach to regulate Distribut- ed Ledger Technology. "The highly anticipated bills are now enacted into law" Schembri said. "The estab- lishment of the Malta Digi- tal Innovation Authority will focus on innovative technol- ogy arrangements and their use cases. At initial stage, the Authority will only focus on DLT and related Smart Con- tracts." He said that the authority was currently working on the rules and procedures to be is- sued for public consultation and gather the feedback of the industry. "This new technology is expected to impact vari- ous industries and thus it is important that there is a framework for cooperation between the MDIA and other authorities," he said. Schembri also spoke about the Delta Summit - the Malta Government official Block- chain event that is going to be organised between the 3rd and 5th October. "This will serve as an opportunity to meet the first world regula- tor and demonstrate how far Malta has gone to become an innovation pioneer," he said. Gerd Sapiano, analyst, Se- curities & Markets Supervi- sion Unit, MFSA, explained that the regulatory frame- work being proposed seeks to ensure investor protec- tion, promote market integ- rity and safeguard financial stability. He said that the framework should set out the various re- quirements which operators in the field must adhere to, replicate the high level prin- ciples of EU market abuse, and impose requirements which extend beyond the fifth anti-money laundering directive. Silvan Mifsud, senior man- ager – advisory services, EMCS, delivered an over- view of the Virtual Financial Assets Act. In a technical presentation he explained the definitions of DLT as- sets under the Act, licensing process of ICOs and of VFA service providers, the finan- cial instrument test and the anti-money laundering re- quirements. Gordon Micallef, partner, RSM Malta, spoke about the Innovative Arrangement and Services Act, and the Malta Digital Innovation Author- ity Act. He explained how primarily, the purpose of the ITAS Act was to lay the ground on which authorisa- tion of an arrangement or service shall be granted by the MDIA. "The MDIA Act, on the other hand, outlines guiding principles for the Authority in supporting the develop- ment of innovative technolo- gy arrangements and services in Malta" he said. Kenneth Farrugia, chief business development officer at Bank of Valletta, said that from an industry perspective, banks and financial services organisations were following progress in the space of DLT & Fintech more closely. "Banks are conscious of the potential presented by the innovative technology, and are looking at ways and means of how they may tap into the benefits that these solutions offer," he said. He made reference to specific case studies, and the benefits DLT solutions provided, pri- marily in terms of customer experience, operational ef- ficiency through automation and cost savings. "Banks will always tread carefully as these are new technologies which have to be tried and tested," Farrugia said. Stefano Mallia, EESC Vice President – Employers, said that Malta had gained the first mover's advantage on the international stage. He argued that it was impor- tant to find the right balance of regulation in the sector. Under-regulation or over- regulation could both be det- rimental to a potentially im- portant sector. While acknowledging that it was going to be a challenge to secure the interest of the banking sector in Block- chain, Mallia said that in the long run, he believed they would also see the immense possibilities.