Malta is the First Country to Enact the Full Legal Framework That Regulates Blockchain and Cryptocurrencies

While countries around the world are struggling to regulate ICOs as the innovative means of fundraising, Malta has everything in place to become the springboard for crypto-related businesses in the form of the Digital Innovation Authority Act.

The country’s openness to cryptocurrencies and blockchain technologies has lured the giants of the business like Binance, Okex, and Bitbay to relocate their operations to Malta.

Malta’s Prime Minister and the Head of the Labour Party, Joseph Muscat proudly announced via Twitter that

Malta is officially the first country worldwide to have holistic legislative framework regulating blockchain & DLT technologies

and then prophetically declared: “We will be the global hub for market leaders in this new sector.”

If somebody is wondering about the meaning of DLT (Distributed Ledger Technology) technologies, this isn’t the only new definition that the legislator introduced to the act. There is also a DLT Asset definition, marking a “virtual token; a virtual financial asset or a financial means, that is intrinsically dependent on or uses Distributed Ledger Technology.”

Consequently, we will be trading on DLT Exchanges, which can be explained as a synonym of what is popularly known as a cryptocurrency exchange.

The other new term introduced is a virtual financial asset (VFA), representing “any form of digital medium recordation that is used as a digital medium of exchange, unit of account, or store of value and that is not – electronic money; a financial instrument; or a virtual token.”

Subsequently, Malta will have Initial VFA Offering and VFA exchanges, which will offer the services of exchanging virtual financial assets (VFAs) exclusively.

The new legislation, among other things, strictly prohibits insider trading, market manipulation, and any misleading information presented to the investors.

According to the official announcement published in Malta’s Government Gazette, the penalties for infringement are intended to be severe.

“A fine of up to fifteen million euro (€15,000,000) or up to three times the profits made or losses avoided by virtue of the offence, and imprisonment for a term not exceeding six years, or both,” can be considered as enough of a warning for anyone hoping to get away with administrative penalties or just losing a license.

However, even though the vast majority of people within crypto-community reacted positively to the Prime Minister’s Twitter announcement, some of them remain skeptical of Malta’s ability to enforce its laws.

One negative comment from Twitter user Ann Marlowe catches the attention.

“Read this about new laws in Malta that create Franken Corporations way beyond the ability of the country or the Eu to regulate,” she started before asking what seems to be a legitimate question: “The island that has had 5 unsolved broad daylight car bombings in recent years is going to regulate a new type of legal personhood?”

Although legitimate, that is the question only time can answer.