Fintech

Malta to Set Up Europe’s First Government Agency Run on Blockchain

Silvio Schembri, Junior Minister for Financial Services, Digital Economy and Innovation in the Government of Malta, declared that Malta Business Registry (MBR) would become the first government agency to be run on a blockchain-based system as well as artificial intelligence. Mr Schembri was speaking at the Prime Minister Dr Joseph Muscat’s inauguration of the new premises of the MBR on the 28 June 2019. The MBR is the national agency that has been created out of the erstwhile Company of Registries (RoC) of Malta.

Mr Schembri, The Malta Independent reported, said that “The premises will serve as the beating heart of the technological activity in Malta. It will reflect our drive to remain at the forefront of the digital revolution, our commitment to embrace new emergent technology and give it room to flourish in our strong ecosystem”. Mr Schembri’s statement follows on the one he had made two months earlier when he had visited the ongoing work to prepare the new offices for the MBR. According to the Malta Independent, Mr Schembri said that through an extensive investment in IT, the RoC would be more efficient and would lessen unnecessary bureaucratic procedures. It would be run by a system that would make possible the provision of new services that could not be provided by the current system. As a result, said the Junior Minister, the Malta Business Registry would be the first in the world to run on blockchain-based system.

Prime Minister Dr Muscat, in his inauguration speech, said that the MBR would complement the modernization process the Malta Financial Services Authority (MFSA) had embarked upon, whilst the MBR would be able to start digitalizing its services and processes even which Distributed Ledger Technology (DLTwould be used in its day-to-day operations. These speeches by the Prime Minister and the Junior Minister not only outlined the Malta Government’s vision for the MBR, but reiterated the government’s vision of turning Malta into a global hub for blockchain and Innovative Technology.

The Malta Government’s vision for turning Malta into a Blockchain Island started in April 2016, when the first draft of the National Blockchain Strategy was drawn up at the request of Economy Minister Dr Chris Cardona. The draft strategy was presented to Dr Cardona in October of the same year, laying out a plan was deemed sufficiently important to be presented to Cabinet. The Press reported that the document outlined a plan to implement blockchain across multiple sectors, not just finance, with the goal of developing and benefiting the Maltese economy as a whole. In February 2018, Junior Minister Schembri produced the first detailed expression of Malta’s vision to become a leader in DLT Regulation. In April 2017, Cabinet approved Malta’s Blockchain Strategy. In the following July, after an intervening election, the Prime Minister appointed Mr Schembri as the Junior Minister of the sector directly accountable to the Prime Minister, showing the strength of the Prime Minister’s commitment to this vision, and his determination to see it through. In the subsequent months, Malta developed a truly innovative legislative framework for the sector, one designed from the ground up to regulate the sector and ensure market integrity and compliance with the highest of international standards and regulations without comprising flexibility or stifling innovation. This legislative framework consists of a law to set up a National Competent Authority for the sector (NCA), a regime of certification, and a law to regulate virtual financial assets (assets on a DLT platform that are neither virtual vouchers, nor financial instruments, nor electronic money), as well as to regulate providers of services related to virtual financial assets. The laws were enacted in July 2018, and had all come into force by November 2018.

After the enactment of these laws, the next step was for Mr Schembri to take the initiative in leading Malta and 5 other EU member states, including France, Spain, Italy, Portugal, Greece, and Cyprus in signing a joint declaration of cooperation on blockchain technology. By means of this declaration, these six nations agreed to promote the blockchain sphere, and work further within it, while exploring co-operation on cross-border DLT projects, with the potential for including other Mediterranean countries. The declaration also provided for regular meetings on technical matters between the three countries. At the same meeting, Malta was confirmed as the host country for 2019’s Southern Mediterranean Summit on Digital Economy. For its vision and leadership in this field, Malta earned the title of the “Blockchain Island”, by which title it is becoming known around the world..

It is therefore completely consistent with the Blockchain Island’s strategy to start implementing blockchain for use by its national agencies. The first opportunity to do so came when the RoC, a public registry responsible for the registered information and documentation on new and existing companies, demerged from  Maltese Financial regulator, the MFSA at the end of 2018 by means of Subsidiary Legislation 595.27 under the Public Administration Act. Fifty years after Neil Armstrong’s one small step for a man became one giant leap for mankind, this one small step for a NCA is likely to increase the pace by which Malta is transforming itself into the most advanced and innovative jurisdiction on innovative technology.

For more information on how you can study, research and do business on the Blockchain Island, contact Zeta for information on how we can serve all your needs in this sector.