Three Bills Published aimed at Regulating the Blockchain and Cryptocurrency Sector.

Introduction

After a much-antic­i­pat­ed wait, the Mal­tese Gov­ern­ment has pub­lished three Bills aimed pri­mar­i­ly at: 1) Reg­u­lat­ing Vir­tu­al Finan­cial Assets, 2) Estab­lish­ing a Mal­ta Dig­i­tal Inno­va­tion Author­i­ty and 3) Reg­u­lat­ing des­ig­nat­ed inno­v­a­tive tech­nol­o­gy arrangements/services.

Whilst Dr. Wern­er & Part­ner will be analysing in detail the con­tents of each Bill [in future arti­cles], it is imper­a­tive that clients are intro­duced to these future laws which as stat­ed by Par­lia­ment Sec­re­tary Dr. Sil­vio Schem­bri are ‘the first of their kind not just for Mal­ta but also on an inter­na­tion­al lev­el.’

Virtual Financial Assets Act.

It goes with­out say­ing that the most impor­tant doc­u­ment pub­lished is the: ‘Vir­tu­al Finan­cial Assets Act, 2018’ which will short­ly become enshrined in Malta’s legal sys­tem. This Act is aimed at: ‘reg­u­lat­ing the field of Ini­tial Vir­tu­al Finan­cial Asset Offer­ings’ (ICOs) and ‘Vir­tu­al Finan­cial Assets’.

The Pre­lim­i­nary Part of the Act will con­tain sev­er­al impor­tant def­i­n­i­tions which will be explained in anoth­er blog but inher­ent­ly guar­an­tee ‘legal cer­tain­ty’ – as there are now clear and con­cise def­i­n­i­tions for impor­tant day-to-day terms such as: ‘Dis­trib­uted Ledger Tech­nol­o­gy’, ‘Ini­tial Vir­tu­al Finan­cial Asset Offer­ing’ and ‘Vir­tu­al Finan­cial Asset’.

Clients and Cryp­to-enthu­si­asts will cer­tain­ly be eager to delve into the details of ini­tial VFA offer­ings par­tic­u­lar­ly the pro­posed ‘Whitepa­per’ which will serve as a form of ‘Guide­lines’ for entre­pre­neurs will­ing to pri­mar­i­ly pur­sue an ICO endeav­our.

What is also impor­tant to gauge at this point in time is that the ‘Com­pe­tent Author­i­ty’ tasked with over­see­ing the imple­men­ta­tion of licens­es, ICOs and rules gov­ern­ing VFAs will be the ‘Mal­ta Finan­cial Ser­vices Author­i­ty’ and pur­suant to Arti­cle 47 of the Act, the MFSA ‘shall intro­duce a test for the pur­pose of deter­min­ing whether a DLT asset qual­i­fies as elec­tron­ic mon­ey, a finan­cial instru­ment, vir­tu­al finan­cial asset or Vir­tu­al token….’

Establishing the Malta Digitial Innovation Authority (MDIA).

The Sec­ond Act will be titled: ‘The Mal­ta Dig­i­tal Inno­va­tion Author­i­ty Act, 2018’. This Bill pro­vides for the ‘estab­lish­ment of an Author­i­ty which will be known as the Mal­ta Dig­i­tal Inno­va­tion Author­i­ty aimed at pri­mar­i­ly ‘pro­mot­ing con­sis­tent prin­ci­ples for the devel­op­ment of visions, skills, and oth­er qual­i­ties relat­ing to tech­nol­o­gy inno­va­tion.’

The Author­i­ty will be tasked with a num­ber of duties such as: ‘reg­u­lat­ing, mon­i­tor­ing and super­vis­ing the pro­vi­sion of such inno­v­a­tive tech­nol­o­gy arrange­ments’, ‘reg­u­lat­ing inno­v­a­tive tech­nol­o­gy prod­ucts’, ‘estab­lish­ing min­i­mum qual­i­ty, com­pli­ance and secu­ri­ty stan­dards for inno­v­a­tive tech­nol­o­gy arrange­ments’ and ‘sup­port­ing inno­va­tion in the devel­op­ment and use of inno­v­a­tive tech­nol­o­gy arrange­ments’. The most impor­tant func­tion of this Author­i­ty will be the pow­er to grant or refuse an inno­v­a­tive tech­nol­o­gy Autho­ri­sa­tion – as seen in Arti­cle 27 of the Bill.

TAS Act & Smart Contract Regulation.

Final­ly, the ‘Inno­v­a­tive Tech­nol­o­gy Arrange­ments and Ser­vices Act, 2018’ will pro­vide for the reg­u­la­tion of des­ig­nat­ed inno­v­a­tive tech­nol­o­gy arrange­ments’. This Bill out­lines the role of impor­tant per­son­nel such as: ser­vice providers, sys­tem admin­is­tra­tors and sys­tem audi­tors.

More­over, as seen in the First Sched­ule of the Act, Inno­v­a­tive Tech­nol­o­gy Arrange­ments shall include: ‘soft­ware and archi­tec­tures which are used in design­ing and deliv­er­ing Dis­trib­uted Ledger Tech­nol­o­gy [e.g. Blockchain Tech.], Smart Con­tracts and any oth­er Tech­nol­o­gy Arrange­ment.

Conclusion

Here at Dr. Wern­er & Part­ner, our qual­i­fied per­son­nel will be more than will­ing to explain these Bills in detail and help you draw up your busi­ness plans/proposals accord­ing­ly. You can con­tact us accord­ing­ly to dis­cuss any ICO or Blockchain-relat­ed project or idea by send­ing an email to: info@drwerner.com.

Dis­claimer: 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.

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