Issue link: https://maltatoday.uberflip.com/i/1120492
23.05.19 12 OPINION George Mangion George M. Mangion is a senior partner of PKF Malta, an audit and consultancy firm | gmm@pkfmalta.com Promoting Malta as a blockchain island in Vietnam L ast week, I led a delegation of PKF sta members for a six day visit to Hanoi - the capital of Vietnam. Dur- ing the visit, I gave a presentation at the 5th Asia O shore Forum held in a prominent hotel. Other meetings were planned outside the two-day forum while also attending a blockchain Start-Ups event which fea- tured over 400 attendees. is is part of a two-pronged Asian drive to promote Malta blockchain and third country resi- dence/visa opportunities for applicants in Vietnam and China. Vietnam is reputed to be one of the emerging Asian tigers with a seven per- cent annual growth in GDP and is poised to expand its infl uence in commerce hav- ing a relatively young population of about one hundred million. In the fi eld of blockchain technology, one observes that Vietnam lacks a prop- er legal framework which may prevent the country maximise benefi ts from the emerging industry yet according to CEO of Bigbom, a blockchain platform com- pany, the Vietnamese government was reported to have expressed its intention to explore ways how to issue enabling leg- islation. One hopes this fully supports the devel- opment of the blockchain industry. Quot- ing Bigbom, a large number of Vietnam- ese people are not fully aware of the terms blockchain and cryptocurrency and often mistake them. Blockchain tech experts say, the use of technology in Vietnam could help in- dustry users save 30-50 per cent of their expenses as those apps would help them improve the quality of production and transparency in fi nance and manage- ment. As can be expected, the tech communi- ty in Vietnam is booming due to a large talent pool of skilled developers. So far, one must admit that offi cial recognition is slow since the country's central bank has clearly stated that it does not recognize crypto assets as legal tender. Still, one cannot but admire the pro- gress done by members of the Vietnam Blockchain Club which aims to connect Vietnam business leaders, educators, policy-makers, regulators, tech entrepre- neurs, for and not for profi t organisations to get acquainted with the new technol- ogy. So how can Malta be of service to block- chain enthusiasts in South east Asia? Last year, the prime minister Joseph Muscat led a trade mission to encourage business opportunities in a number of sectors including crypto and blockchain applications. Why Vietnam? is is a so- cialist-oriented market economy being the 47th-largest in the world measured in GDP and 35th largest in the world meas- ured by purchasing power parity (PPP). It goes without saying, it is truly re- markable the swift transformation of the Vietnamese economy which over the last 25 years has reduced unemployment to single digits. I was enthusiastic meeting delegates at Vietnam Blockchain Start-Up event in Hanoi discussing how Malta is a pioneer country being amongst the fi rst in Europe to welcome blockchain tech- nology. Needless to say, Vietnam is also catching up with this revolution especially in the fi ntech sector and one expects it to prom- ulgate various laws and regulations simi- lar to the ones enacted in Malta last year. In this context, one cannot underesti- mate the merits of virtual currencies and tokens that in the future could be used for cross border payments, such as is hap- pening in Malta through the use of the sandbox regime for remote gaming. is facilitates operators to exchange imme- diate and transparent transactions with players in VFA assets. Last year, Malta passed three VFA acts. e fi rst one is termed the MDIA bill, which will provide for the establishment of the Malta Digital Innovation Authori- ty as a central regulator. One expects that the law will guide government policy to- wards the industry and set the foundation stone for the development of Malta as a hub for new and innovative technologies. Another piece of legislation called the TAS bill, will set out the regime for the registration of Technology service pro- viders and the certifi cation of "technology arrangements". is framework will allow for the regis- tration of IT auditors and administrators of distributed ledger technology (DLT) platforms and their certifi cation. It is complementary to the Virtual Currency bill which will set out a framework for in- itial coin off erings (ICOs) and the regula- tory regime on licensing of White Papers compiled by issuers. Many agree that virtual currencies have become a global phenomenon that has also caught the attention of users in Viet- nam. Delegates at the Blockchain Start-up event were interested to know about the regulatory prowess in Malta. It is worth noticing that the IMF recently conceded these virtual currencies are facing "tech- nological" problems which could eventu- ally be solved, and that as such they could be "easier and safer" to hold than paper bills in remote regions, or countries with unstable national currencies or "weak in- stitutions". It is true that Bitcoin had a bouncy ride start such that in a number of cases, ex- change platforms have gone out of busi- ness or have failed - in some instances due to hacking by third parties. During the Start-Up event, speakers explained how a virtual currency represents the concept of value and can be used in framework as a medium of exchange, a unit of account and a value storage. However, it should be noted it does not have a link to any particular jurisdiction and, hence, doesn't qualify for a legal tender status. As it were, no jurisdiction guarantees the performance of its func- tions, which is only held together by the mutual consensus of the community of users. Paper and coin money, as we have tradi- tionally been accustomed to, are referred to in various ways, as, fi at money and are recognised in the country that issues it. By contrast, one notes the uniqueness of a virtual currency that in itself does not entail prior authorisation by a central- ised entity. Both a business trader and a customer can aff ect payments in a virtual currency without being entwined in the banking hegemony or intermediaries in the fi nancial services market. As can be expected in Vietnam which is an emerging market there is ample scope for e-wallets to be introduced since a high proportion of the population do not have access to bank accounts. ere are unique advantages when using virtual currencies in Vietnam to help cash fl ow issues in industrial, fi shing, logisti- cal and agrarian sectors. One appreciates that Malta can somewhat help Vietnam given that it has recently consolidated its legal framework on this industry. It is now in a position to receive appli- cations and license VFA agents and IT services providers while facilitating the li- censing of "White Papers" issued by new ICO's. e promotion of this expertise in Vietnam can pave the way for future cross-border consultancy projects. Without doubt, the prime minister's vis- it to Vietnam has oiled the wheels of pro- gress for potential collaboration in this revolutionary technology. One cannot underestimate the merits of virtual currencies and tokens that in the future could be used for cross border payments, such as is happening in Malta through the use of the sandbox regime for remote gaming