Having already established itself as an online gaming and financial services hub, Malta has set its sights for new industries to further expand growth and diversify its economy. Towards the end of 2019, the Malta Financial Services Authority had announced that it received over thirty letters which showed interest from prospective VFA service providers. Just a year before the receipt of these letters of interest, three Bills of law were published in relation to the blockchain and cryptocurrency sectors in Malta.
Following months of tweaking and consultation, Malta has one of the most holistic pieces of legislation to govern these industries. An intriguing position indeed, which brings about a certain degree of optimism.
Needless to say, there has been a lot of promotion in relation to Malta, highlighting it as the blockchain island. We have had consistent emphasis from the government about Malta’s willingness to adapt to the needs of the blockchain industry, together with a high scale event taking place a few months ago. With that said, many have argued that the numbers were still too low to state that the blockchain and cryptocurrency sectors will serve as the basis for a new economic pillar. One must keep in mind that this industry is still quite in its initial stages and to maintain its foot in, it is essential that Malta attracts best of breed organisations.
In order to improve the chances of success, the government has also set up a task force and published a national blockchain strategy. So what else can the government do to nurture Malta to establish itself as the main country for blockchain? One such strategy could be that government adopts blockchain technology for its own institution, leading by example and embracing this innovation.
One other key aspect is promoting blockchain success would be open dialogue between the regulators and service providers. A robust regulatory regime would allow for the growth of the industry whilst maintaining high standards.
One of the challenges that the country will face is that of human resources. In this respect, the University of Malta is taking an important role in delivering academic programmes to develop future specialists in the field of blockchain.
Another issue which will need to be addressed in the short to medium term is the banking landscape. A number of banks are now engaging in de-risking strategies and certain niche economic sectors are heavily underbanked. This is coupled with limited correspondent banking relationships which continue to add pressure to the sector.
The strategies adopted in the short term will be critical as Malta seeks to develop this new industry. Will blockchain be as instrumental as online gaming and the present financial services? Time will tell.