Cryptocurrency laws the Maltese government had drafted were a “world-first” which would make the country a global pioneer in the sector, Digital Economy parliamentary secretary Silvio Schembri told parliament on Wednesday.
Addressing MPs, Dr Schembri said that no other country had yet faced the challenge of regulating what was by definition a decentralised and regulation-averse sector of the economy.
Malta, he said, wanted to clearly define what was and was not permissible within the industry, as well as establish due diligence requirements for companies granted licenses to operate in the sector. The government saw the sector as an economic niche Malta could target and had set up a specialised unit focusing solely on researching blockchain technologies.
A London-based blockchain company would be moving its headquarters to Malta, in an investment worth €20 million, Dr Schembri said.
Digital innovation authority
Dr Schembri also discussed the Malta Digital Innovation Authority, which would be tasked with assessing, licensing, and monitoring companies wishing to operate in these sectors in Malta. It would have the power to issue administrative penalties and rescind licenses of companies which broke the law or failed due diligence requirements.
These requirements, he said, were “stricter than the fifth EU Anti-Money-Laundering directive.”
Dr Schembri said he could not understand those who said the government wanted to rush the law to make money-laundering easier.
As things stood, he noted, there was no legal basis to scrutinise companies in these emerging sectors – these laws would provide one.
Agreeing with the general thrust of the law, Opposition MP Kristy Debono objected to the fact that the MDIA Board would be composed solely of four to eight ministerial appointees which would be hand-picked by the Prime Minister, since the Digital Economy portfolio fell within the Office of the Prime Minister.
She called for the board to be more representative of the industry which it would be regulating, with a number of members nominated by operators themselves.
Referring to a National Ethics Committee which Dr Schembri said would be established to weigh in on ethical issues arising from new technologies, Ms Debono also pointed out that the MDIA Board was not obliged to establish this committee, but “could do so” after consulting the respective minister.
Together with the fact that the minister could also issue subsidiary legislation to govern the sector, this put too much power in government hands, she said. Scrutiny was needed to safeguard the Maltese economy from the sort of reputational damage which it had already suffered in other sectors, the Opposition MP said.