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"

Bank of Lithuania Exploring Digital Currencies

  • Bank of Lithuania economist Aistė Juškaitė says the central bank is exploring digital currencies. 
  • Juškaitė says more clarity about CBDC will allow banks to choose digital currency designs with mitigated risks. 

Lithuania’s central bank is joining the global trend towards digital currencies by actively exploring the technology. 

In a recent interview with The Payers, principal economist at the Market Infrastructure Department at Bank of Lithuania Aistė Juškaitė claimed digital currencies have the potential to impact the financial system in a “significant way.”

Juškaitė highlighted a number of advantages for central bank digital currencies (CBDC), including providing a more stable form of money in remote regions with diminished access to ATMs and reducing the costs for citizens abroad operating in the remittance marketplace. 

The Bank of Lithuania economist claimed there is no current “consensus” on the CBDC cost-benefit balance, or its impact on monetary policy and financial stability. Juškaitė said that more clarity on the technology would allow central banks to choose a digital currency design to “mitigate potential unintended side effects.”

Juškaitė also commented on the influence of the private sector, such as Facebook’s libra. 

She said, 

This impulse of the private sector to address perceived inefficiencies in the financial system is quite understandable.

She continued, 

Nonetheless, it is the task of official institutions to be at the frontlines of such changes and ensure systemically sound courses of action that bring about the greatest possible benefit to society.

Featured Image Credit: Photo via Pixabay.com