Malta, the 'Blockchain Island': First Country to Establish a Full Regulatory Framework for Distributed Ledger Technology

On Wednesday (4 July 2018), the Parliament of Malta, an island nation that is part of the European Union, unanimously approved three bills that regulate Distributed Ledger Technology (DLT), making Malta the first country to provide legal certainty in this space.

The three bills passed by "The House" on Wednesday evening, just before summer recess, are the Innovative Technology Arrangements and Services Bill (Bill No. 43), Virtual Financial Assets Bill (bill No. 44), and the Malta Digital Innovation Authority Bill (Bill No. 45). 

This is how Joseph Muscat, Malta's Prime Minister, announced the news on Twitter:

The man he refers to in this tweet, Hon. Silvio Schembri, is the Junior Minister (or Parliamentary Secretary) for Financial Services, Digital Economy and Innovation.

Before these bills were approved, several crypto exchanges, including Binance, BitBay, and OKEx, had announced their intention to move their base of operations to Malta.

Silvio Schembri said in a press release:

"This marks an important milestone through which companies will be provided with the necessary tools to operate in a regulated environment. This will put minds at rest for investors and whoever uses this new technology that is likely to change the world. I am optimistic that further companies will choose Malta to operate from with a system that offers stability and that will eventually result in further economic growth."

Jean-Ph Chetcuti, the co-founder and managing partner at Chetcuti Cauchi, a Maltese law firm, said in an interview:

"We now have a comprehensive framework for the blockchain industry to grow and flourish in Malta. This is a momentous milestone for Malta as a forward-looking economy, truly confirming Malta as the 'Blockchain Island'. We now have ample legal certainty for existing and new DLT projects. The larger crypto operators we have been speaking to in the last months are more comfortable committing to further investment and they are setting up in Malta."

 

Featured Image Credit: Photo by "Giuseppe Milo" via Flickr; licensed under "CC BY 2.0"

Global Task Force, U.S. Tax Agency, SEC Dominate Crypto Headlines

Regulations are ruling the crypto headlines so far this week. Over the past 24 hours, we’ve learnt the Financial Action Task Force (FATF) is reportedly set to finalize new international standards for regulating cryptocurrency firms next month. The commissioner of the Internal Revenue Service (IRS) has stated his agency has “made it a priority” to issue more comprehensive crypto tax guidance “soon.” Finally, the U.S. Securities Exchange Commission (SEC) announced it would delay, once again, its decision on the VanEck and SolidX Bitcoin exchange-traded fund (ETF) proposal.

At the time of writing, bitcoin (BTC) and ether (ETH) are trading at $7,945.4 and $252.9; a 0.54% and 0.83% jump over the past 24 hours, respectively. As for the MVIS CryptoCompare Digital Assets 10 Index, it is currently tracking at 3,822.7 (-0.6%).

Global Standards for Regulating Crypto Firms Next Month

According to reports from CoinDesk, the FATF is set to finalize new international standards for regulating cryptocurrency firms next month. These standards, they report, are widely expected to subject crypto exchanges, wallet providers, and other businesses to the “travel rule” – a colloquial term given to a rule found in the Bank Secrecy Act (BSA) that requires all financial institutions to pass on certain information to the next financial institution, in certain funds transmittals involving more than one financial institution.

Introduced in 1996 in the U.S., the “travel rule” is designed to help law enforcement agencies detect, investigate, and prosecute money laundering and other financial crimes by preserving an information trail about persons sending and receiving funds through funds transfer systems. The arrival of such international standards would go beyond the basic know-your-customer requirements that are widely enforced in the crypto space at present.

IRS Commissioner: More Detailed Crypto Tax Guidance ‘A Priority’

According to letter from IRS Commissioner Charles P. Rettig dated May 16, the agency has “made it a priority” to issue a more comprehensive tax guidance for cryptocurrencies. The Commissioner’s letter was written in response to a request from 21 Congressmen to provide clarity on tax treatment in relation to cryptocurrency holdings.

In 2014, the U.S. tax agency issued a guidance for cryptocurrency. In his May 16 response letter, Rettig revealed the IRS will “soon” issue more robust guidance. “I share your belief that taxpayers deserve clarity on basic issues related to the taxation of virtual currency transactions,” the Commissioner wrote.

SEC Delays Decision on VanEck SolidX Bitcoin ETF

The SEC announced the postponement of a decision regarding the VanEck SolidX bitcoin ETF proposal. The postponed ETF proposal was initially filed over a year ago. In January – amid the U.S. Government shutdown – it was withdrawn, only to be resubmitted later that month. On March 29, the commission delayed the joint proposal for the first time. The SEC must announce its decision – or, for the final possible time, postpone its decision – on the proposed bitcoin ETF no later than August 19.

Notably, the U.S. investor watchdog is seeking comments from the public in relation to the proposed VanEck SolidX bitcoin ETF. To guide commentary, they included fourteen questions in Monday’s filing. Comments must be submitted within the following 21 days, whilst rebuttals to said comments are due within the next 35 days.