The Maltese government is already receiving responses on the consultation on DLT regulation
Last February, Hon. Silvio Schembri, responsible for the Financial Services, Digital Economy and Innovation, published a document entitled: ‘Malta a leader in DLT Regulation’. When this document was launched, the government called for public consultation regarding this proposal. The Malta Information Technology Law Association (MITLA) has submitted their thoughts on this proposal.
The DLT regulation will control and regulate companies using blockchain technology. By this legislation, the government is willing to provide legal security to the Distributed Ledger Technology (DLT) system. Moreover, in this consultation document, the government is hoping to place Malta as a leader by adopting and recognise DLT and other similar technologies. In fact, Malta’s government is hoping for an increase in technology opportunities for more sustainable innovation.
DLT technologies are quite new, hence new complex blockchains are constantly created. In their report, MITLA stated that the government need to avoid over-regulating foundational technological architecture. Through this process, other technologies would not risk or impact future investment in other technologies to the island. It was noted that the current regulatory model hinders blockchain technology thus challenging the decentralised technology architecture.
MITLA stated that in order to regulate blockchain, the Maltese authorities need to adjust their laws as perceived by an international dimension.
Malta is heading in a good direction by regulating blockchain through Malta’s technological legislation. However, Malta’s government need to make sure that we are in line with the European Commission directives. In addition, the Commission has already started to implement a common blockchain standard such as FinTech regulation.
The responses the MITLA sent to the government consultation process are:
- Resist the temptation to set up overly complex hierarchal authorities. Favour polycentric as opposed to traditional regulation. In general terms: governance principles are more desirable than regulatory burdens.
- Ensure active participation in EU and international standardisation efforts including the EU Blockchain Observatory and ISO, amongst others.
- Focus on Off-chain Equivalence, implementation of practical vertical use cases as opposed to technology/architecture regulation.
- Implement ‘Recycle Box’ legislative exercises. Apply ex-post not ex-ante regimes.
- Provide a predictable, minimalist, consistent, and simple legal environment and revise the applicability of current rules to enhance legal certainty.
- Drive blockchain adoption through sandboxing and public sector applications as well as incentives. Increase national R&D efforts and foster incubation of ideas and acceleration of start-ups in this sector.
- Promote, even through minor legislative interventions, the adoption of Hybrid Smart Contracts with a possibility of Government leading by example with immediate effect.
- Restrict discussions on legal personality (if at all) to decentralised autonomous organisations.
To know more about ICO legislation in Malta please follow this link.
Contact us directly on +356 20103020 or by mail at info@blockchainrocket.io to find out more.
