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Weather in Malta

16.3°C dust

dust

Time Zones:

New York

Malta

Shanghai

" Serving the world...

...from Malta "

Malta -the first country in the world to develop a regulatory system which is custom made for blockchain-based businesses

16 / 11 / 18

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Malta has become the first and only country to introduce an organized framework for cryptocurrency use. Three bills have been signed into law, and they are expected to change the way people see and use cryptocurrencies in the country.

Components of the regulatory laws

As from November 1, 2018, companies operating in Malta will now require detailed licensed certifications. This means every existing decentralized blockchain technology element must be censored and sufficiently monitored by government-assigned agencies. The advantage of this for cryptocurrency users and investors is that there would be reduced chances for ICO fraud, since the project developers must keep traceability records that grants regulatory authorities access to either or all of the team members’ locations, as well as some ability to implement restrictive orders on the accounts where the funds are collected.

The Virtual Financial Assets Act (VFAA)

The VFAA aims to find a way of regulating and strengthening the cryptocurrency industry, while adequately ensuring financial investment protection for virtual currency users. The act outlines certain stipulated conditions that must be met by new cryptocurrencies launching in the country, as well as those that must be met by other cryptocurrency function facilitators. This act applies to such operation entities as crypto exchange services, wallet providers, blockchain protocol analyzers (especially ICO listing platforms), portfolio managers, among others.

According to the VFAA, all cryptocurrency issuing firms conducting an ICO must have prepared evident documents, such as the project whitepaper that shows the project roadmap and details its feasibility.

The virtual financial assets act considers and refers to ICO-issued tokens as virtual assets.

Malta Digital Innovation Authority (MDIA)

The MDIA has been vested with statutory rights and responsibilities of regulating the overall blockchain sector in the country. Its function has the highest authority and is the ultimate decision maker, as far the country’s cryptocurrency and blockchain activities are concerned. Hence the institution formulates the guiding instructions that cryptocurrency firms must abide by.

Furthermore, it is also mandated with the responsibility of approving the activities of any company, business, individual, etc. intending to carry out any cryptocurrency-related activity. This also translates to the issuance of persuasion (or a decline of such) to intending ICO crowdfunding events.

Consequently, MDIA monitors the trends and events as they unfold, and is expected to subsequently make amendments or modifications to the act whenever it becomes necessary. This means any periodic changes made to any of the cryptocurrency governing acts would be initiated and executed by the authority.

Lastly, the MDIA’s jurisdictional responsibilities also covers the meting out of punishment and sanctions to erring stakeholders.

Innovative Technology Arrangement and Services (ITAS) Act

The ITAS Act aims to regulate designated innovative technology structures. This act classifies blockchain projects into different categories, based on their individual characteristics and activities. Hence, it provides the framework by which all censored and approved blockchain-utilizing firms are appropriately recognized by the law. This seemingly takes precedence over the VFAA and the MDIA, and consequently serves as a basis for their own functions.

This act is thus considered the foundational backbone for the overall cryptocurrency regulation process, since it defines every peculiar term relating to blockchain, cryptocurrency, and distributed ledger technology (DLT). In addition to this, it sufficiently provides information on what is relevant to each entity at the stages or conditions under which they are relevant.

All three acts are intertwined and actively working towards a common goal. However, the division of the acts based on function helps for better understanding, and ultimately improves the chances of their being effective.

Implications of Malta’s regulatory policy implementations on the overall cryptocurrency scene

With Malta’s move in providing a detailed regulatory framework for cryptocurrency and blockchain adoption, the country does not in any way consider digital currency use as being illegal or unsupported on its own. This is a contrast to what is found in some countries like China, where there are absolute bans on cryptocurrency use. The issues that governments are having with digital currencies revolve around such things as a supposed disadvantageous decentralization of the sphere- which they say could lead to substantial tax loss, as well as the volatility traits of the markets, among other complains.

Malta’s bold decision to create such a regulatory framework for cryptocurrency use may be considered an unnecessary risk by some quarters. However, this step will likely serve as an evaluation yardstick for other countries – in both the near and distant future.

 

Malta -the first country in the world to develop a regulatory system which is custom made for blockchain-based businesses

16 / 11 / 18

Share Article on 

 

Malta has become the first and only country to introduce an organized framework for cryptocurrency use. Three bills have been signed into law, and they are expected to change the way people see and use cryptocurrencies in the country.

Components of the regulatory laws

As from November 1, 2018, companies operating in Malta will now require detailed licensed certifications. This means every existing decentralized blockchain technology element must be censored and sufficiently monitored by government-assigned agencies. The advantage of this for cryptocurrency users and investors is that there would be reduced chances for ICO fraud, since the project developers must keep traceability records that grants regulatory authorities access to either or all of the team members’ locations, as well as some ability to implement restrictive orders on the accounts where the funds are collected.

The Virtual Financial Assets Act (VFAA)

The VFAA aims to find a way of regulating and strengthening the cryptocurrency industry, while adequately ensuring financial investment protection for virtual currency users. The act outlines certain stipulated conditions that must be met by new cryptocurrencies launching in the country, as well as those that must be met by other cryptocurrency function facilitators. This act applies to such operation entities as crypto exchange services, wallet providers, blockchain protocol analyzers (especially ICO listing platforms), portfolio managers, among others.

According to the VFAA, all cryptocurrency issuing firms conducting an ICO must have prepared evident documents, such as the project whitepaper that shows the project roadmap and details its feasibility.

The virtual financial assets act considers and refers to ICO-issued tokens as virtual assets.

Malta Digital Innovation Authority (MDIA)

The MDIA has been vested with statutory rights and responsibilities of regulating the overall blockchain sector in the country. Its function has the highest authority and is the ultimate decision maker, as far the country’s cryptocurrency and blockchain activities are concerned. Hence the institution formulates the guiding instructions that cryptocurrency firms must abide by.

Furthermore, it is also mandated with the responsibility of approving the activities of any company, business, individual, etc. intending to carry out any cryptocurrency-related activity. This also translates to the issuance of persuasion (or a decline of such) to intending ICO crowdfunding events.

Consequently, MDIA monitors the trends and events as they unfold, and is expected to subsequently make amendments or modifications to the act whenever it becomes necessary. This means any periodic changes made to any of the cryptocurrency governing acts would be initiated and executed by the authority.

Lastly, the MDIA’s jurisdictional responsibilities also covers the meting out of punishment and sanctions to erring stakeholders.

Innovative Technology Arrangement and Services (ITAS) Act

The ITAS Act aims to regulate designated innovative technology structures. This act classifies blockchain projects into different categories, based on their individual characteristics and activities. Hence, it provides the framework by which all censored and approved blockchain-utilizing firms are appropriately recognized by the law. This seemingly takes precedence over the VFAA and the MDIA, and consequently serves as a basis for their own functions.

This act is thus considered the foundational backbone for the overall cryptocurrency regulation process, since it defines every peculiar term relating to blockchain, cryptocurrency, and distributed ledger technology (DLT). In addition to this, it sufficiently provides information on what is relevant to each entity at the stages or conditions under which they are relevant.

All three acts are intertwined and actively working towards a common goal. However, the division of the acts based on function helps for better understanding, and ultimately improves the chances of their being effective.

Implications of Malta’s regulatory policy implementations on the overall cryptocurrency scene

With Malta’s move in providing a detailed regulatory framework for cryptocurrency and blockchain adoption, the country does not in any way consider digital currency use as being illegal or unsupported on its own. This is a contrast to what is found in some countries like China, where there are absolute bans on cryptocurrency use. The issues that governments are having with digital currencies revolve around such things as a supposed disadvantageous decentralization of the sphere- which they say could lead to substantial tax loss, as well as the volatility traits of the markets, among other complains.

Malta’s bold decision to create such a regulatory framework for cryptocurrency use may be considered an unnecessary risk by some quarters. However, this step will likely serve as an evaluation yardstick for other countries – in both the near and distant future.