A Discussion with Malta Parliamentary Secretary for Financial Services, Digital Economy, and Innovation – Silvio Schembri
Malta has quickly emerged as a popular location to set up blockchain based businesses. Globally, some countries have banned crypto operations, others have created rules by enforcement while most continue to struggle with the regulatory environment for initial coin offerings (ICO). Malta has opened its doors to the world of cryptocurrencies seeing an economic opportunity to create a jurisdiction with well defined laws that regulate the world of digital assets. The highest profile example of this mission came when Binance, one of the largest cryptocurrency exchanges in the world, decided to migrate its operations from Asia to the Mediterranean island. Binance expects to hire up to 200 people in Malta – a significant economic boost. Binance CEO Zhao Changpeng said they are convinced Malta will be the next hotbed for innovative blockchain companies
Recently, another high profile blockchain based business announced its intent to establish operations in Malta. Berlin based Neufund – security token platform. At the time of the announcement, Neufund CEO Zoe Adamovicz, stated;
“Together with Malta’s Government, we want to kick-start the creation of crypto-friendly laws with Malta’s DLT framework initiative already serving as a great foundation. And we hope to influence a positive change in the banking industry with other upcoming projects. We are impressed by the deep understanding and openness shown by Malta’s Government that serves as a great example to regulators all over the world being a live example that actions and official statements speak louder than words.”
Being an European Union member nation, Malta benefits from the single market and the requirements to abide by certain EU laws. Innovative blockchain based companies are very aware of this fact. Currently, Malta is in the midst of a legislative process with three bills addressing the cryptocurrency / blockchain sector. It is widely expected these bills will be approved in the coming weeks.
Crowdfund Insider recently connected with Hon. Silvio Schembri, the Malta Parliamentary Secretary for Financial Services, Digital Economy, and Innovation. He is the leading champion to turn Malta into the #BlockchainIsland. Schembri stated earlier this year, “we want our financial services to be ahead of their time.” Our discussion is shared below.
Congratulations on landing Binance to operate in Malta. How long had you been in discussion with Zhao Changpeng before they announced their decision? Do you know which other jurisdictions they were considering?
Silvio Schembri: During the last few months, as a Government, we have been holding regular meetings with many players that operate in the industry. This was part of the process to seek the industry views which we consider a fundamental ingredient in the formulation of a legislative framework that truly caters for the needs of those that operate in the space. Binance, being the leading exchange and a central part in the ecosystem, was one of them. We obviously were aware that Binance was looking at other jurisdictions but for us this was not of particular importance. We prefer to concentrate on our priorities and then let the operators make their own business decisions.
Silvio Schembri: During the last two or three decades it has been our ability to offer accessibility and support to those that are looking to invest in Malta. This is not limited only to this new technology but is present across all sectors, be it financial services or manufacturing.
We are taking the same approach with Binance, demonstrating our pro-business approach not just by lip-services but in practical terms.
Binance mentioned a proposed bill helped to sway them. Please explain expectations for this legislation.
Silvio Schembri: As we stated in the document that we published in February of this year, we are working on three separate bills. The first Bill will established a new authority that will be certifying technological arrangement in DLT, the second Bill will offer the legal framework through which this can be done while a third Bill will be regulating virtual currencies, ICO, exchanges and related services. Furthermore, the Bills puts a lot of emphasis on the need to have market integrity and stability plus offering strong consumer protection.
We have explained our vision to Binance and addressed their concerns. As things turned out, it is evident that Binance felt comfortable with the proposed legalistive changes.
Malta wants to become a “Blockchain Island.” How did this vision come about?
Silvio Schembri: This is part of an evolution. During the last decades, Malta moved away from traditional labour intensive activities and managed to diversify its economy by offering a number of high value added, knowledge driven services.
Nowadays, the financial services sector and the i-gaming sector represent over one-fifth of our economic output and employ a very significant portion of our work-force. This was made possible by being proactive and by taking advantage of the changing environment. DLT is disruptive by nature and given our ability to adopt to change coupled with the expertise and experience gained throughout the years from the strong presence of the financial services and gaming, it made sense to take the lead. By being the ‘blockchain island’ we will be moving away from constraints imposed by our physical size and we aim to among the movers and shakers in this space.
Other jurisdictions, such as Gibraltar and Switzerland, are positioning themselves to be crypto-friendly. What is Malta’s competitive advantage?
Silvio Schembri: Malta is obviously not the only jurisdictions that is looking actively to position itself in this space. However, I believe we are taking a much more broader and holistic approach when compared to others. There is also the fact that Malta is an EU member state thus offering a higher degree of assurance as it has several obligations to observe.
We are not limiting ourself to cryptocurrency but are looking to the whole technology. We believe smart contracts are as much as important as cryptocurrencies, for example. We are also one of the very few who are proposing to give legal personality to technology arrangements: a very innovative idea.
Silvio Schembri: Nowadays the sound emitting from the US, France and other large countries is different from what it used to be up of a year ago. Initially, it was all about banning such activities but nowadays there is awareness that disruptive technology cannot be stopped and the regulatory authorities in these countries are appreciating the need to regulate and to regulate in a way that makes sense. This is positive for us. There will be ups and downs, but nowadays there is more understanding.
Looking forward, how do you see this strategic economic push evolving?
Silvio Schembri: It is still early in the day to make bold prediction. However, this technology can be as revolutionary as the internet. While the economic benefits of the internet took several years, the faster pace of today points towards a much more rapid impact on our way of doing things. On a local level, we are seeing great interest in what we are doing and I am quite confident to state that in five to ten years this sector will be as important to our economy as the financial services or the i-gaming is. Additional, while in itself it might be viewed as risky, we believe that taken together with other sectors, it will help to diversify further our output and hence render us more resilience.this technology can be as revolutionary as the internet. While the economic benefits of the internet took several years, the faster pace of today points towards a much more rapid impact on our way of doing things #BlockchainClick To Tweet
Are you in discussion with other crypto exchanges? What about interest from issuers?
Silvio Schembri: As I have stated earlier, the interest from major international players is there. On almost a daily basis we are meeting with potential investors that are exploring the option to move to Malta. We are not in a position to give names, but more news will become public in the coming weeks that confirm this.'On almost a daily basis we are meeting with potential investors that are exploring the option to move to Malta' #BlockchainIslandClick To Tweet