Issue link: https://maltatoday.uberflip.com/i/1075590
13 maltatoday | SUNDAY • 27 JANUARY 2019 NEWS ECONOMY PAUL COCKS THE volume of cryptocur- rency and token trading in and from Malta is increas- ing daily and is expected to match the volume of trad- ing registered by the gam- ing industry locally within five years, MaltaToday has learned. One cryptocurrency ex- change alone recorded 12 transactions in 10 days in November as the volume of trading, and the number of the operators in Digital Ledger Technology (DLT) activity in Malta – are on the rise following the introduc- tion of the Virtual Financial Assets Act. The Malta Financial Ser- vices Authority (MFSA) has received more than 340 no- tifications from operators in DLT – Blockchain – activi- ties in Malta since the VFA Act came into force on 1 No- vember 2018. The staggering amount of notifications received, which highlight the extensive Blockchain-related activities and related services being offered in and from Malta, include 58 notifications from companies wanting to issue Initial Coin Offerings (ICOs). Companies involved in Blockchain activity, whether as agents and intermediaries or as players directly in the field, had until the VFA Act came into force to notify the MFSA of their activities. In total, the MFSA received around 340 notifications, of which 259 were found to have had the required detail and documentation submit- ted in full and could there- fore be processed immedi- ately. The rest were referred back to the applicants for further details. Of those 259 notifications, 41 were by VFA agents, 36 by issuers of ICOs and 182 were received from service provid- ers. ICOs are a means of rais- ing funds, whereby an issuer issues tokens, or a cryptocur- rency, and offers them in ex- change for funds. Parliamentary secretary for digital services and innova- tion Silvio Schembri said he was highly encouraged – and surprised – by the feedback and uptake the Act gener- ated. "Malta has become a pow- erhouse of economic inno- vation, and this legislation places so far ahead of other countries," he said. "Now when we talk, people and countries listen." Schembri said the fledgling industry was having a ripple effect on other sectors. The need for trained pro- fessionals and the plethora of job opportunities created overnight has pushed educa- tion centres, including estab- lished universities, to start offering diplomas, graduate and masters degrees in DLT, cryptocurrency, ICO and vir- tual financial assets servic- ing. As with the gaming in- dustry, DLT is expected to impact infrastructure over the next few years, as more professionals and companies choose Malta for their base of operations and for their employment destination. "We are already discuss- ing this with other minis- tries and authorities and we are getting complete coop- eration on how to prepare ourselves for the expected growth," Schembri said. He said the government, like the MFSA, was com- mitted to ensuring security throughout the industry and to fight abuse and money laundering. "We were not content with that and our new legislation now also covers crypto to crypto activity," Schembri said. He said that, all clichés aside, Blockchain was truly just the beginning and that the possibility for growth was endless. "What this industry has in its favour is the fact that is it is not limited by physical, geographical barriers. This makes us look forward to an exciting couple of years, as Blockchain becomes more and more mainstream," Schembri said. "We are at the forefront of this revolution, and the feed- back to the VFA Act proves that major players are al- ready seeing Malta as the true home of Blockchain and future innovation." Blockchain for 2019 and 2020. "After two years of strong ex- pansion, the world economy is growing more slowly than expected and risks are rising," Lagarde said, pointing at dis- ruption to international mar- kets caused by the trade stand- off between the US and China. US-China trade war A survey of over 800 CEOs by research group The Con- ference Board, released earlier this month, showed that global business leaders saw recession as their number one external concern for 2019. Threats to global trade and political insta- bility ranked second and third respectively. Brockdorff said the US has a sizeable trade deficit with China that Donald Trump, with his 'America first' policy, wants to correct. "The situa- tion remains very unpredict- able and it all depends on how talks will end. No agreement will disrupt international trade and have a negative impact on economic growth." This, coupled with a possible correction in global stock mar- kets, could cause widespread disruption. Another factor breeding uncertainty is Brexit and the prospect of this happening with no deal. An abrupt depar- ture will lead to a two-year ad- justment that could be disrup- tive, Brockdorff added. Malta will not be immune to a global economic slowdown. Depending on how severe and widespread it is, this could manifest itself in less invest- ment, fewer tourists and gen- eral uncertainty. So far, the economy is run- ning above par and with gov- ernment finances registering a surplus and the debt-to-GDP ratio heading below the 50% mark, Malta appears well- placed to face any impending storm. Sounding the warning But warnings have been sounded by social campaigners like Anthony Gatt, director of Caritas. In an interview with the Times of Malta last Novem- ber, Gatt called for better re- distribution of wealth. "There are some who are doing well, however, people with a low income are suffering a lot… While there are a number of assistance measures in place, we believe that the well-off have to share with those who lack resources, so that no one would suffer," he said. The situation is nowhere near the boiling pot in France. Malta's yellow vest 'problem' is a different kettle of fish al- together but government may have to do more to stymie in- equality. ksansone@mediatoday.com.mt Industry growing rapidly as Malta rushes forward THE government does not have a plan to attract the quality investment needed to Malta the Blockchain Island it has been boasting about for so long, the National- ist Party (PN) said yesterday. Reacting to news that Blockchain com- pany DQR had laid off most of its work- force after facing financial difficulties, the PN said that the fact that the company had opened its doors just nine months ago clearly showed the government had no long-term strategy to "build and strengthen" the Blockchain sector. DQR fired most of its 65 staff and froze its operations in Malta after one of its main investors, a Bitcoin mining com- pany, ran into difficulties as a result of the recent dip in cryptocurrency markets. The company's chief executive officer Kristian Haehndal said it was freezing its operations until it can pay off its debts and bring in new investors. The company relocated to Malta from Germany in April last year and planned to employ up to 200 people. Parliamen- tary Secretary for Digital Innovation Sil- vio Schembri had described the company as one of the biggest in the world and one that would "cement Malta's reputation as the Blockchain Island". "If the government really wants Malta to become Blockchain Island, it should at- tract sound and credible investment from renowned companies and companies able to provide all the necessary expertise for Maltese workers to grow and prosper in this innovative sector," the PN said in a statement. "The government should ensure that we are not amateurs on economic mat- ters and that proper due diligence is carried out before granting licences to operators…the country cannot afford to continue losing its credibility and reputa- tion." The PN wanted to see quality investment in Malta and not unstable operators with shades of corruption, as witnessed in the banking sector, the PN added. In a reac- tion, the government said the Opposition was trying to give the impression that it was business as usual despite its internal problems. It said the PN's statement had showed the Opposition was against eco- nomic innovation and against Blockchain. "The Opposition showed gross hypoc- risy when it used a company's internal situation for its own purposes and when it had not taken part in any of the six pub- lic consultation exercises on Blockchain," the government said. PN: No plan for quality investment after 65 employees get laid off Knights of Blockhain: DQR's principals collect a Malta Blockchain Award for Careers Program of the Year "Malta has become a powerhouse of economic innovation, and this legislation places so far ahead of other countries," he said. "Now when we talk, people and countries listen"