Issue link: https://maltatoday.uberflip.com/i/946236
maltatoday, SUNDAY 25 FEBRUARY 2018 II Business & Finance Malta – A leader in DLT regulation Throughout the years, Malta has man- aged to re-invent itself several times. From an economy based on the textile industry and other low value added manufacturing, it has transformed itself into one based on services, high-level manufacturing and knowledge-based activities. This was possible thanks to Malta's constant innovation and investments in its infrastructure: physical, institu- tional or legal, as well as its human resources. The presence of a robust regulatory support infrastructure offers access to a full range of services and products and offers certainty that has also played a pivotal role. The last years have seen the prolifer- ation of new and disruptive technology that will have material impact on the majority of industries including the fi- nancial services, education and health, logistics, transport and public adminis- tration as well as others such as online gaming and intellectual property. We're at a crossroads. Malta has a choice to make: either to follow others or to lead. We have opted to lead. Leading by being proactive, by being open to business, and by establishing the right legal infrastructure to attract entrepreneurs and investors from all over the world. In doing so, Malta can be transformed into an international hub for new, emerging and innovative technology, especially Blockchain. The uses of Blockchain are almost infinite. They range from financial services where a growing number of financial services firms are using this technology to introduce innova- tions, such as smart bonds and smart contracts to asset management. Other applications include public sector services, for example, having patients' encrypted health information shared with multiple providers without the risk of privacy breaches. The framework that the Government is proposing will offer legal certainty in a space that is currently unregulated. The framework touches upon a number of issues including types of authorisa- tions, legal personality, and the appli- cability of law on smart contracts. We believe this will foster the creation of a new economic sector that potentially can be as big as the remote gaming sector or the financial services. It can also help in the further development of existing sectors and the creation of new ones as it will usher additional foreign direct investment in Malta, the transfer of know-how and related skills and new specialist opportunities for our community. The framework proposed consists of three pieces of legislative changes. One involving the setting up of a spe- cialised authority; another separate Bill will set out the regime for the registra- tion of Technology Service Providers and the certification of Technology Arrangements, while a third Bill will set out the framework for ICOs and other services related to virtual currencies. The latter will also include intermediar- ies such as brokers, exchanges, wallet providers, asset managers, investment advisors and market makers dealing in virtual currencies. The new authority will promote governmental policies that favour the development of Malta as a centre of excellence for technological innova- tion and will, among other things, help to safeguard Malta's reputation by implementing the best standards in the sector. The authority will also play a vital role in the protection of users and consumers, in particular when either directly or indirectly, they will interface or use this technology. We will be taking a principle-based approach, thus avoiding putting unnec- essary burden on industry. The new legislative framework will help to sepa- rate products and services that offer return and value added from those that are frauds. It will set standards that will help ensure compliance in terms of our international obligations, including anti- money laundering. These changes should also see the further development of Fintech and Regtech, two sectors that are expand- ing at a rapid rate. Looking around, one can easily note that funding for Fintech companies is on the rise, sup- port for the industry from governments is increasing and an abundance of both incubators and accelerators are offer- ing startups the means and assistance to grow within the industry. We aim to be at the forefront of this new wave of innovation. Our target is to create the right environment and the right incentives to attract business – directly related to Fintech and Regtech – to Malta from all over the world. In line with the Government's politi- cal mandate, these changes will help Malta to futher diversify its economic output, rendering it more resilient to external shocks. This will help in stimulating economic growth through technology led innovation, and will put Malta on the global map as a major hub for this kind of innovative technol- ogy. It will ensure that future genera- tions benefit from the initiatives we are taking today. We're at a crossroads. Malta has a choice to make: either to follow others or to lead. We have opted to lead. Leading by being proactive, by being open to business, and by establishing the right legal infrastructure to attract entrepreneurs and investors from all over the world Silvio Schembri Parliamentary Secretary responsible for Financial Services, Digital Economy, and Innovation OPINION