Blockchain: a time-stamped ledger of records, not owned by a single computer, a series of information bound to each other like a chain. It is managed by a group of computers and everything is transparent, making every single person accountable for anything they do. The data is distributed, not copied, thus creating a new technology that is disrupting the very nature of the Internet as we know it.
Like any new technology however, this phenomenon does not come without its own caveats. In its early days, because of a lack of standardised definitions, new blockchain companies setting up in Malta found resistance from banks, among other entities, to be able to operate effectively. Companies in fields such as Fintech, AI and Distributed Ledger Technologies complained about a lack of infrastructure, which blocked them from successfully opening their doors. This escalated to the point that they threatened to leave the island, taking their business elsewhere. This is why The Malta Financial Services Authority (MFSA) and the Financial Intelligence Analysis Unit (FIAU) came together and published a consultation document on guidance aimed at the entities capable of opening accounts for these companies. These include credit institutions, payment providers and electronic money institutions.
These guidelines will also help banks and their respective clients be better equipped against the increase in money laundering and fraud risks which this new technology could bring to the market. Like any untested product, it is always far better to err on the side of caution than potentially leave flaws in regulations that could be misinterpreted and abused. The banks all agree: blockchain may significantly boost trading volumes but policies are needed to safeguard the risk being taken.
The setting up of the Malta Digital Innovation Authority (MDIA), after the Malta Digital Innovation Authority Bill was approved by Parliament last year, is also a boon to the industry, keen to highlight the importance AI is set to play on the Maltese Islands. During this new technology’s early stages, there was talk of blockchain as being cryptocurrency, which create confusion and wariness following Bitcoin’s sudden decrease in value. There is now however a better understanding of AI as a new driving force. It has helped push further diversification in the Malta’s industry portfolio, helping to reduce economical risk, while spurring growth.
As with the advent of blockchain, the MDIA have launched a consultation paper, reaching out to professionals and operators in the AI field to help strategise Malta’s next steps. The CEO of the MDIA envisages further improvement to – and stemming from – the growth of the blockchain industry. With more money in the country’s pockets, more beneficial projects can be enacted that everyone, not only people working within the sector can enjoy.