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"

Ethereum Dev Reports “Critical Vulnerabilities” in Gambling App FairWin

  • Ethereum developer claims to have found multiple 'critical vulnerabilities' in gambling game FairWin
  • The ethereum-based game has been accused of being a pyramid scheme. 

An Ethereum developer has reported finding a critical vulnerability in the gambling game FairWin, which is believed to have been using most of the network's capacity earlier this month.

FairWin Vulnerabilities

Philippe Castonguay, R&D researcher for blockchain-gaming studio Horizon Games, says that the gambling app built upon Ethereum’s network has multiple vulnerabilities, 

[FairWin] contains critical vulnerabilities that put all funds at risk...details on the exploits will be published soon.

Castonguay expanded upon the vulnerabilities to The Block,

One allowing the owner/admin of the contracts to totally drain [the smart contract containing $8 million in ether], one where the admin can prevent users from withdrawing forever and one where anyone, not just the owner, can steal new deposits.

In addition to pointing out the application’s vulnerabilities, Castonguay also called FairWin a “ponzi scheme.” The description of the game’s structure more closely resembles a pyramid scheme, paying abnormal dividends to users who deposit ether on the platform while providing network effect incentives to more vested participants. 

Despite the accusations of being a scheme, FairWin has managed to gain a substantial foothold on Ethereum’s network. Tracking platform ETH Gas Station shows that the gambling game accounts for more than 60% of total gas usage on Ethereum, with more than $8 million in ether locked in smart contracts. 

FairWin’s website claims the gambling app has no risk of stolen funds and the smart contract code has been “securely authenticated.”

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