The Importance Of Blockchain Cryptocurrency In Malta

The Importance Of Blockchain Cryptocurrency In Malta
Updated on
January 30, 2023

The Digital Future

The rapid increase in blockchain technology has given many smaller countries the opportunity to attract companies and investors from a range of specialised online industries as they bid to improve their financial resources. The selling of domain names, online gambling and financial enterprises involving digital blockchain cryptocurrencies are just some of the entrepreneurial schemes and investments that small island territories in particular are keen to encourage.

Malta And Cryptocurrency Finance

In the Mediterranean, the island of Malta has introduced a range of measures to encourage the establishment of a digital financial centre trading in cryptocurrencies. The legislative initiatives of the Maltese government has already managed to persuade many that of the large, multi-lingual digital currency exchange companies to relocate to Malta. The arrival of digital technology companies serves to highlight how successful the island's policies have been. Their progress is expected to continue as the interest in digital finance becomes a reality, bringing lasting benefits to Malta in providing employment and increasing revenue which can be used to improve the country's infrastructure.

Cryptocurrency Legislation

Malta has made enormous progress in compiling the appropriate legislation to account for the introduction of blockchain. As a purely digital asset with no physical form, transactions in cryptocurrencies rely on the electrical cryptography system to convert digital assets into segments of code. A user does not have to open an account and transactions can be sent to any location within seconds. Unlike traditional forms of finance, digital currencies provide a flexibility in regard to where companies need to be based, allowing small islands such as Malta the opportunity to compete with larger countries on equal terms. Cryptocurrencies such as Bitcoin and Ethereal are increasing in circulation with an estimated five million users, a figure which is almost certain to increase in the near future. To gain an advantage from technological developments in digital finance, Malta has looked to the future by organising several innovative strategies in the form of legislative acts.

Malta Digital Innovation Authority

Legislation such as the Malta Digital Innovation Authority has been introduced to govern online Distributed Ledger Technology and crowd funding activities. It is also designed to offer through a set of minimum standards, protection to those who use technology. The Initial Virtual Financial Asset Offerings legislation aims to clarify in different stages, the status of digital finance in terms of whether it is money or a token as regards the current legal framework where it can be identified as of EU origin or Maltese. Anyone who is affirmed at this first stage would not have to proceed to the next phase of the proceedings under the Financial Instruments Test although this would need to confirmed by an independent review body.

Malta Financial Services Authority

The government's white paper regarding the ICO has a set of principles to confirm the Malta Financial Services Authority's competency. It was introduced as a measure to encourage new businesses and investors regarding plans for projects in regard to the Virtual Financial Asset Offerings legislation. The intention is to clarify the situation regarding investors' assessments of the potential success of various projects and the assets of a virtual financial agreement. Once the legislation has won approval the white paper will have a limit of six months while waiting for offers from the public.

Technology Arrangements And Services Act

The new Technology Arrangements And Services Act intends to provide regulations regarding technology regarding smart technology contracts and software packages that use the Distributed Ledger Technology services. Regulations also aim to supply a code of conduct for any arrangements that are made. Included in the act are a set of guidelines which would have to be followed in order for an Innovative Technology Arrangement regarding software and adherence to the outlined standards to receive endorsement from the authorities even though approval and certification is not compulsory.

Reasons For Companies To Move To Malta

As Malta redefines itself as a centre for blockchain and cryptocurrencies, the traditional Maltese financial institutes including banks have been understandably cautious about the new legislative proposals. Malta has supplemented plans for the new legislation to clarify the role of digital finance with initiatives to encourage specialists in cryptocurrency technology to consider moving to the island. Already identified as one of the major centres of IT technology, Malta has offered residency permits for those who are not actually based in the country with a taxation rate of only 15% and the right to travel without a visa throughout numerous countries including those in the Schengen area.

Malta And The Way Ahead

In recent years the government of Malta has worked hard to ensure that they have been able to identify the strategies it should pursue in its quest to improve the standard of living in the country. By clearly identifying the advantages that are to be gained from encouraging investment in blockchain cryptocurrencies and creating an environment in which digital financial companies and other IT industries can flourish, it has devised measures that should provide an excellent framework for future prosperity.

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