A soft rollout of cryptocurrency is likely to begin shortly in Malta in order to test if it can be introduced without putting the country’s economy at risk. The intention is that the virtual currency would be launched within a ''controlled framework'' to test the proposed legislation but at the same time eliminating any potential risks on the wider local economy. Such testing would follow the National Blockchain Strategy which was approved by the Maltese Cabinet in April.
A "Sandbox test" on the impact of Cryptocurrency on the Maltese Economy
The recommendation to introduce a mock cryptocurrency was proposed in a report issued by auditing firm PricewaterhouseCoopers (''PwC'') and commissioned by the Malta Gaming Authority (''MGA'') on the potential introduction of virtual currency in Malta. The PwC report covers the strengths and weakness of cryptocurrency as well as the threats and opportunities it poses to the country. The findings and recommendations presented in the PwC report are currently being reviewed by a virtual currency task force which was set up by Malta's Prime Minister Joseph Muscat last month. The task force is entrusted in reviewing proposals made to it, as well as to make recommendations to the Government to implement its National Blockchain Strategy.
According to the MGA chairman Joseph Cuschieri, the Malta Financial Services Authority, the Financial Intelligence Analysis Unit and the Central Bank of Malta agreed to participate in the virtual currency roll-out test and will be providing their feedback when necessary.
Mr Cuschieri declared that the MGA is determined to take a proactive approach on the subject, but at the same time, he stressed the importance that Malta preserves its reputation as a safe place to do business."The country could no longer adopt a "do nothing" approach regarding cryptocurrency."
Malta the "blockchain capital of Europe"
The Maltese Authorities are embracing Bitcoin and Blockchain in a bid to style Malta into the "blockchain capital of Europe", as announced by Prime Minister Joseph Muscat. In April 2017, the Cabinet approved a revolutionary blockchain strategy. This "Sandbox" test builds on the approved strategy and shall put Malta on the map as a prime Fintech jurisdiction of choice in Europe.
Although there are still those who remain sceptical of cryptocurrencies due to the somewhat notorious reputation which they have gained due to their volatility and the risks associated with it, however, it is becoming increasingly clear that the future of the online gaming industry relies on Malta's ability to remain at the forefront of such innovations.
Mr Cuschieri highlighted that "cryptocurrencies present us with a double-edged sword, combining opportunity with significant risks". The test proposed by the MGA shall help Malta take on a calculated risk. Should this exercise be successful, Malta would be in a position to be the first country to regulate crypto-currency and blockchain.
Our Fintech Practice
Our lawyers and financial services specialists at Chetcuti Cauchi Advocates welcome the innovations which the financial services sector is currently and seek to provide bespoke solutions to our clients by fusing together traditional legal notions with new technologies. Led by Senior and co-founding Partner Dr Maria Chetcuti Cauchi, our Fintech practice strives to assist clients in this burgeoning and evolving sector of law which shall reshape the financial services sector as we know it.
A soft rollout of cryptocurrency is likely to begin shortly in Malta in order to test if it can be introduced without putting the country’s economy at risk. The intention is that the virtual currency would be launched within a controlled framework to test the proposed legislation but at the same time eliminating any potential risks on the wider local economy.
The recommendation to introduce a mock cryptocurrency was proposed in a report issued by PwC and commissioned by the Malta Gaming Authority on the potential introduction of virtual currency in Malta. The PwC report covers the strengths and weakness of cryptocurrency as well as the threats and opportunities it poses to the country. The findings and recommendations presented in the PwC report are currently being reviewed by a virtual currency task force which was set up by the Prime Minister earlier this month. The task force is entrusted in reviewing proposals made to it, as well as to make recommendations to the government to implement its National Blockchain Strategy.