Malta is positioning itself to be a leader when it comes to Distributed Ledger Technology (‘DLT’) regulation by recognising and embracing these technologies as well as creating the right regulatory environment in Malta, which can serve to attract innovation and investment in this sector. Both central government as well as specific sectoral regulators (including the Malta Financial Services Authority and the Malta Gaming Authority) have, during 2018, issued a number of consultations as to how these Malta laws need to be fine-tuned in order to best embrace the DLT revolution as well as setting up specific sandboxing projects. The three pieces of legislation properly regulate the DLT field and the operators within the same, which pave the way for Malta to establish itself as the blockchain Island and a key player in the crypto arena. The legislations published on the 20th July 2018, and come into effect on the 1st November 2018, are the following:
- Virtual Financial Assets Act, 2018 – provides a regulatory framework pursuant to the issuance of Initial Virtual Financial Assets Offerings and Virtual Financial Assets, which are more commonly known as Initial Coin Offerings, and other ancillary services related to cryptocurrencies
- Innovative Technology Arrangements and Services Act, 2018 – provides for the regulation of innovative technology arrangements and innovative technology services as referred to in the First and Second Schedule to the Act.
- Malta Digital Innovation Technology Act, 2018 – provides for the establishment of the Maltese authority – the Malta Digital Innovation Authority – the main purpose of which, amongst others, is to support the development and implementation of technology innovation, including distributed and decentralised technology
The three Acts work together by providing a broad legal framework. Indeed, Malta has in fact seen an influx of interest and a number of key players have already setup or are in the process of setting up base in Malta.
The three laws are in force as from the 1st November 2018, however one may start operating prior to said date, since the Acts provide for a transitionary period.
Fenlex together with Fenech & Fenech Advocates, have together setup a FinTech Team which specialises in TMT, Financial Services and Tax law, covering all technological, regulatory, corporate and tax aspects relative to this new sector of business, whilst Fenlex, provides the full range of corporate services typically required by such clients. We believe that our firm’s FinTech Team is uniquely placed to service clients operating in the blockchain space, and this in view of the fact that it is a recognised leader in four key areas of law, and services of interest to this type of operation, namely:
- Fenlex, has been providing the full range of services since the late 1980s and is accordingly one of the largest, most experience trust and corporate services providers in Malta.
- Fenech & Fenech Advocates leads in TMT law and has done so for the past decade plus. The TMT & IP Law Department is headed by Dr. Antonio Ghio, one of the partners of the firm. Antonio lectures ICT Law and Cybercrime Law at the University of Malta and is a founding member and president of the Malta Information Technology Law Association (). Antonio is a fellow of the European Law Institute based in Vienna and has also served as Chairman of the Malta Communication Authority for a number of years, amongst others, and has been heavily involved in recent months in contributing to the drafting of the new suite of laws just published by the Government of Malta to regulate operators in the blockchain space locally.
- Fenech & Fenech Advocates’ Financial Services Team is composed of specialised lawyers and has been active in this field since its inception in the 1990s. Clients are assisted with respect to the submission of licence applications to the Malta Financial Services Authority, as well as with their ongoing regulatory requirements, which relationship forged with the regulator over the past decades will serve us well in assisting clients with ICOs and applications for VFA Licences going forward.
- Fenech & Fenech Advocates’ Tax Department is the oldest and most experienced tax department of law firms locally. The Tax & Immigration Law team of specialised lawyers has been active in this sector since the late 1980s; unlike other law firms until relatively recently, the firm has been servicing its corporate and private clients’ tax needs in a comprehensive manner inhouse for the past 25 years or so and has never, and does not, outsource any part of the service. The firm offers a ‘one stop shop’ tax service to its personal and corporate, primarily international, clients, with the Tax Department handling all structuring and advisory matters, complemented by the Fenlex’s corporate services Tax Compliance team and Accounts team, as required.