Malta and its role in the Blockchain/Cryptocurrency Revolution


Viva La Rev­olu­cion!’ shout­ed the throngs of crowds in the streets of Havana. With a new regime in place, the bal­ance of pow­er had shift­ed, and the par­a­digm of soci­ety had changed for­ev­er. A phrase which has been immor­talised and enshrined in his­to­ry is rein­vent­ing itself in this new and glo­ri­ous era where Fin­tech and Dis­trib­uted Ledger Tech­nol­o­gy seem to be weav­ing them­selves in the fab­ric of this new and fas­ci­nat­ing dig­i­tal soci­ety.

In an ever-cau­tious world where Cryp­tocur­ren­cies are for the time-being feared, rather than respect­ed, tiny Mal­ta has embarked on a jour­ney towards not only accept­ing the ‘sta­tus’ of Cryp­tocur­ren­cies but has essen­tial­ly pro­vid­ed legal cer­tain­ty and gov­er­nance to this spec­trum. This was done by pro­mul­gat­ing three laws which are cer­tain­ly bound to raise a cou­ple of eye­brows across the finan­cial world.

Three ingenious Bills.

Three Bills were recent­ly pub­lished which are bound to get investors up and run­ning towards the tiny Mediter­ranean island. The Vir­tu­al Finan­cial Assets Act, The Tech­nol­o­gy Arrange­ments and Ser­vices Act & the Mal­ta Dig­i­tal Inno­va­tion Author­i­ty Act are avant-garde and rev­o­lu­tion­ary; inno­v­a­tive and pio­neer­ing.

In this con­nec­tion, the Mal­tese Gov­ern­ment has com­mit­ted itself to cer­tain­ly set­ting the bar in terms of (though not exhaus­tive­ly) Blockchain Tech­nol­o­gy, Ini­tial Coin Offer­ing (ICO) and Smart Con­tract Arrange­ments. The Bills are tan­ta­mount to the Government’s ini­tial pledge to ‘rebrand’ Mal­ta as: ‘Blockchain Island’. The birth­place of this tai­lor-made leg­is­la­tion will ensure that entre­pre­neurs will be set­ting up shop and relo­cat­ing to the island….and not to sam­ple Malta’s sun or beach­es! Big things are hap­pen­ing on this island….and every­one will be want­i­ng a slice of the action.

The Virtual Financial Assets Act.

The most antic­i­pat­ed Bill which was instant­ly met with exu­ber­ance and fas­ci­na­tion is undoubt­ed­ly the Vir­tu­al Finan­cial Assets Act. Offer­ing a pletho­ra of def­i­n­i­tions and clar­i­fi­ca­tions, the main crux of this leg­is­la­tion per­tains to Crowd­fund­ing ini­tia­tives (hence­forth termed: Ini­tial Vir­tu­al Finan­cial Asset Offer­ings), the White Paper require­ments for a suc­cess­ful ICO and the intro­duc­tion of a Finan­cial Instru­ments test.

With­out going into too much detail, the first stage of this lat­ter inno­v­a­tive ‘test’ would effec­tive­ly deter­mine whether a Vir­tu­al Finan­cial Asset (any form of dig­i­tal medi­um that is a medi­um of exchange and is not: elec­tron­ic mon­ey, a finan­cial instru­ment or a vir­tu­al token) qual­i­fies as a finan­cial instru­ment in terms of exist­ing leg­is­la­tion (Mal­tese and/or EU) (e.g. MIFID reg­u­la­tions).

The sec­ond stage would deter­mine whether the Vir­tu­al Finan­cial Asset qual­i­fies as an ‘asset’ under the pro­posed VFA Act. It should be clar­i­fied that, in case of an affir­ma­tive deter­mi­na­tion dur­ing the first stage, the per­son under­tak­ing the ‘Finan­cial Instru­ments Test’ would not be required to pro­ceed to the sec­ond stage. The respec­tive clas­si­fi­ca­tion result­ing from the ‘Finan­cial Instru­ments Test’ would need to be ver­i­fied by an exter­nal inde­pen­dent pro­fes­sion­al review­er.

The White Paper require­ments per­tain­ing to the ICO are an exhaus­tive list of points need­ed to sat­is­fy the ‘Com­pe­tent Authority’s (in this case the Mal­ta Finan­cial Ser­vices Author­i­ty) so called ‘check­list’. Estab­lished with the inten­tion of attract­ing young entre­pre­neurs and busi­ness­men, the whitepa­per will allow ‘investors to make an informed assess­ment of (i) the prospects of the issuer (e.g. a Com­pa­ny) (ii) the pro­posed project and of (iii) the fea­tures of the vir­tu­al finan­cial asset.’ [LINK: C:\Users\Stefanie Mallmann\Desktop\Blockchain and Cryptocurrencies\Virtual Finan­cial Assets Act, 2018.pdf] Once approved, the White Paper will be valid for a peri­od of 6 months for offers to the pub­lic.

The MDIA Act

An inter­est­ing reg­u­la­tion will cer­tain­ly be the Mal­ta Dig­i­tal Inno­va­tion Author­i­ty (MDIA) Act. Inher­ent­ly, this Law will seek to for­mu­late rules gov­ern­ing Dis­trib­uted Ledger Tech­nol­o­gy (DLT) Arrange­ments and Crowd-fund­ing set ups. The Act estab­lish­es the roles and respon­si­bil­i­ties of the Author­i­ty includ­ing the ‘fos­ter­ing, pro­mo­tion and facil­i­ta­tion of advance­ment and util­i­sa­tion of inno­v­a­tive tech­nol­o­gy arrange­ments and their design’ [LINK: C:\Users\Stefanie Mallmann\Desktop\Blockchain and Cryptocurrencies\Malta Dig­i­tal Inno­va­tion Author­i­ty Act, 2018.pdf] and to pro­tect users of Inno­v­a­tive Tech­nol­o­gy Arrange­ments includ­ing con­sumers and the pub­lic in gen­er­al to ensure min­i­mum stan­dards which meet their legit­i­mate expec­ta­tions.

The TAS Act

Final­ly, the Tech­nol­o­gy Arrange­ments and Ser­vices Act will seek to pro­vide for the reg­u­la­tion of des­ig­nat­ed tech­nol­o­gy arrange­ments (e.g. Smart con­tracts or any soft­ware which uses Dis­trib­uted Ledger Tech­nol­o­gy as a plat­form for the exe­cu­tion of said covenant) and for the exer­cise by or on behalf of the MDIA of reg­u­la­to­ry func­tions per­tain­ing to said agree­ments. The Act pre­scribes cer­tain con­di­tions which would need to be adhered to for an ‘Inno­v­a­tive Tech­nol­o­gy Arrange­ment’ to be ful­ly recog­nised (e.g. rules per­tain­ing to soft­ware and com­pli­ance stan­dards] and cer­ti­fied by the Author­i­ty accord­ing­ly [though it must be stat­ed that cer­ti­fi­ca­tion and approval is entire­ly vol­un­tary).


Whether tiny Mal­ta can cause an earth­quake in the Crypto/Blockchain world remains to be seen. That the tremor has been felt by most of the world is unde­ni­able. The ques­tion remains as to whether the laws drawn up and pre­sent­ed by the Gov­ern­ment will hit the nail on the head and cat­a­pult Mal­ta into unchar­tered but immense­ly excit­ing waters. Whilst Finan­cial Reg­u­la­tors and Cred­it Insti­tu­tions have been rather coy and mod­est in their recep­tion of the Bills (and Banks have not par­tic­u­lar­ly wel­comed the usage of Vir­tu­al Cur­ren­cies with open arms), the issue remains as to whether trust and accep­tance will even­tu­al­ly be built thanks to legal cer­tain­ty.

What can safe­ly be con­clud­ed is that a rev­o­lu­tion has begun, and tiny Mal­ta is set­ting the spark. Whether the Cryp­to-flames will ignite into a world-wide phe­nom­e­non is the next chap­ter which is yet to be writ­ten.


The above-men­tioned arti­cle is sim­ply based on inde­pen­dent research car­ried out by Dr. Wern­er and Part­ner and can­not con­sti­tute any form of legal advice. If you would like to meet with up with any of our rep­re­sen­ta­tives to seek fur­ther infor­ma­tion, please con­tact us for an appoint­ment.

About Dr. Michael Calleja

Dr. Michael Calle­ja, born on the 07.01.1988, stud­ied law at the Uni­ver­si­ty of Mal­ta from 2006 till 2012. He grad­u­at­ed Bach­e­lor of Laws & Euro­pean Stud­ies in 2009 with a Sec­ond Class Upper Degree and grad­u­at­ed Notary Pub­lic in 2010. He suc­cess­ful­ly defend­ed his the­sis enti­tled: ‘Beyond the Bosman Rul­ing: Con­trac­tu­al Dis­putes in Foot­ball and the Spe­cif­ic Nature of Sport in the Euro­pean Union’ in 2012 and obtained his Doc­tor of Laws (LL.D) accord­ing­ly.

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