There has been a booming interest in blockchain and cryptocurrencies in Malta since 2017, when the leadership of the country, which already has some experience in the successful integration of innovative technologies in iGaming, announced its claims to Malta's status of a blockchain island.
As a result, in July 2018, the parliament of Malta passed three important acts ensuring the legal status and regulatory framework for virtual assets and distributed ledger technology: Malta Digital Innovation Authority Act (MDIA Act), Innovative Technology Arrangement and Services Act (ITAS Act) and Virtual Financial Assets Act (VFA Act).
The adoption of the new acts helped attract the cryptocurrency business to Malta. The world's largest cryptocurrency exchange Binance, the Berlin-based company Neufund, the American crypto exchange Bittrex, the non-profit organization Poseidon, the OKEx exchange, the blockchain platform Neufund, the large London-based company YOVO and others moved to Malta or opened their offices there last year.
The Government of Malta actively cooperates with representatives of the blockchain industry and introduces the distributed ledger technology into the operation of state agencies.
Rather Enabling Political Environment
Representatives of the government and the Parliament, as well as the President of Malta remain optimistic about the prospects of the distributed ledger technology. The leaders of the country connect the blockchain with the possibilities of economic and social development and stress that Malta should be among the pioneers in the integration of the new technology. Banks hold a more reserved position, avoiding cooperation with cryptocurrency businesses but at the same time vesting interest in having legal certainty within the cryptocurrency environment.
Neutral Legal Environment
Regulatory Convergence The authority to regulate transactions related to cryptocurrencies and blockchain is shared between the Malta Digital Innovation Authority, MDIA, established in 2018, and the Malta Financial Services Authority, MFSA. In addition, the Stock Exchange and the Gaming Authority are involved in the regulation of distributed ledger technology in Malta. There have been no inconsistencies in the position of the regulators.
Definiteness of Legal Regulation The Malta Digital Innovation Authority Act (MDIA Act), Innovative Technology Arrangement and Services Act (ITAS Act), and Virtual Financial Assets Act (VFA Act) in conjunction with the legislation applied by analogy regulate the fundamental legal relationships associated with blockchain and cryptocurrencies.
Stability of Legal Regulation The legislative process with respect to crypto continues to develop. The procedures for licensing and registering cryptocurrency- and blockchain-related businesses are currently being developed. It can be assumed that the legislation will gradually be adjusted in the medium term, given new technological developments and enforcement experience, and, where possible, seeking to improve the environment for crypto-business.
Adequacy of Legal Regulation Although Maltese legislation on cryptocurrencies is one of the most comprehensive and progressive in the world, there are issues associated with the expensive and complex licensing procedure for crypto-companies and refusal of the country's banks to work with crypto-business.
Situation with the Rule of Law Malta is not covered by the World Justice Project , therefore, RLI is not identified. The calculation of the Rule of Law Index is based on the average for the group of countries with similar environment for the promotion of democracy, human rights and freedoms, and rule of law in the Freedom in the World index (Freedom House). The Country Aggregate Score for Malta is 91 in the Freedom in the World index, therefore, countries with similar scores (Country Aggregate Score: 89-93) – these include Italy, France, United Kingdom, Czech Republic, Bahamas, Mauritius, St. Vincent & the Grenadines, Costa Rica. Average Rule of Law Index (World Justice Project ) for this group is 0,68.
The conditions of the legal regulation of blockchain and cryptocurrencies are rather favorable, and since the values of the sub-criterion of the rule of law are average (0.68), the amount of the difference between weighted (multiplied by Rule of Law Index score) and unweighted assessments are not significant.
Enabling Infrastructure Environment
Malta ranks 30th out of 193 countries in the E-Government Development Index and 84th out of 190 countries in Doing Business rankings.