The Malta Digital Innovation Authority (MDIA) was officially launched at the DELTA Summit by Parliamentary Secretary for Financial Services, Digital Economy and Innovation, Hon Silvio Schembri. This will officially open the doors of the Authority responsible for the certification and registration of technology arrangements. This launch brings to fruition the MDIA Act, one of the three legislative instruments regulating the Financial Technology industry in Malta, in particular Blockchain and Crypto.
The MDIA Act was unanimously approved by the Maltese Parliament on the 4th July 2018 and regulates the functions and powers of the authority which shall be entrusted with the role of certifying Innovative Technology Arrangements and with the creation of a register of Service Providers (including Systems Auditors and Technical Administrators). Parliament has also approved two other acts, the Innovative Technology Arrangements and Services (ITAS) Act, regulating designated innovative technology arrangements and their functions, and the Virtual Financial Assets (VFA) Act, which is concerned with initial virtual financial asset offerings and their ancillary services.
The CEO of the Malta Financial Services Authority (MFSA) recently announced that the remaining two Acts are expected to take force of law on the 1st November 2018, once a legal notice on the matter is published within the Malta Government Gazette.
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The Impact of the MDIA
The MDIA bears the responsibility of shaping Malta’s regulatory environment for this industry from a technical perspective, whilst also allowing such innovative technologies to further flourish. As more technology-oriented companies choose to establish a presence in Malta or to become recognised as service providers by the MDIA, their development will be supported by local efforts which are currently being undertaken to attract some of the biggest names in the industry, as well as numerous start-ups. The Authority will provide further practical guidance to the law by publishing four Consultation Papers, that invite feedback from those working within the field.
The policies and objectives upheld by the MDIA strike a balance between allowing investors to establish their business in within a legal framework, whilst ensuring that standards of protection for consumers and investors are nonetheless held high. The MDIA is also tasked with assisting the Maltese government to assess ways in which such innovative technology may be applied to the business of government itself. Studies are already taking place within the national health and education agencies with several more expected to follow in the coming months and years.
The Authority is charged with maintaining the integrity of the market and public interest within the industry, as well as protecting against abuse and non-compliance of the laws in place. Sanctions may be applied if the MDIA finds that laws are not being adhered to.
The Blockchain Island
Malta has made various efforts towards establishing itself as the world’s first Blockchain Island, particularly by approving the world’s first comprehensive DLT and innovative technology regime through the three pieces of legislation mentioned above. The Maltese Government is committed to adopting blockchain itself and encouraging the industry to flourish. The Malta Stock Exchange has already developed a subsidiary to create a regulated crypto exchange with OKex and Neufund, as well as entered a MoU with Binance. The Government recognises the need for additional talent in this sector and has introduced Blockchain scholarships within the University of Malta, including Distributed Ledger Technology and Blockchain within existing curricula as well as encouraging individuals to obtain their Masters and Doctorate Degree in this discipline.
Various Blockchain-based companies have recognised Malta as the ideal environment to establish their headquarters or an operational arm, praising it for its pro-business attitude and avant-garde approach towards such innovative technologies. Another launch expected at the Delta Summit will be Revolut, the fintech giant that has disrupted the well-established European banking industry.
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Our Fintech Practice
Chetcuti Cauchi Advocates is a leading law firm within the Fintech industry, where Senior Partner Dr Priscilla Mifsud Parker, and Head of Corporate & Fintech, Mr Steve Muscat Azzopardi are actively advertising and assisting clients to navigate through the new regulatory regime. Should you be interested in setting up your tech company and attaining recognition from the regulatory, launching your ICO under Maltese regulatory framework, setting up a Crypto Exchange or a Crypto Fund, we would be happy to guide you through the regulatory processes.
