Blockchain has brought significant benefits to Malta – Silvio Schembri

The enthusiastic promotions of Malta as a “blockchain island” may have come and gone, but Economy Minister Silvio Schembri is adamant that blockchain technology has brought – and continues to bring – significant economic benefits to the island.

Pressed to quantify this economic benefit in an interview on Andrew Azzopardi at 103, Schembri believed that it is not a benefit that can be easily measured, and described blockchain as a technology with multiple – and not necessarily direct – benefits.

“Can you describe how much e-mail contributes to the economy,” the minister replied by way of example, rejecting Azzopardi’s suggestion that a calculation of this benefit could be made.

Did Blockchain Help End Malta’s Greylisting?

And in Schembri’s view, one notable benefit of blockchain technology was an indirect one: its use in Malta’s bid to overcome its graylist – the first for an EU member state – by the Financial Action Task Force.

It did so, he said, through the use of the Malta Business Registry.

Schembri highlighted that one of the FATF’s main sore points regarding Malta’s financial jurisdiction concerned the way it collected information on the ultimate beneficial owners of Malta-registered companies: weaknesses in the system raised concerns that such beneficial ownership could be hidden, facilitating financial crime including money. money laundering and tax evasion.

But this, the minister continued, was addressed through significant upgrades to the Malta Business Registry, which recently became the first business registry in the EU to use blockchain technology.

MBR saw advantages in a technology that permanently stores records and transactions across a distributed virtual space. All data stored in this way is immutable and cannot be manipulated and replaced by anyone, which also enables a more transparent audit trail where necessary.

Malta and the rise of fan tokens

But Schembri also highlighted more direct benefits of the technology in Malta’s tech and financial sectors, highlighting a recent example of a more direct economic benefit to the country.

Blockchain is most commonly associated with cryptocurrencies – whose transactions are recorded on a blockchain – and while Malta had announced itself to crypto companies in recent years, Schembri refrained from mentioning them directly.

However, the minister highlighted an associated concept that has taken root in the last couple of years, and in which Malta plays a key role: “fan tokens” sold by sports clubs to their supporters.

These fan tokens are themselves acquired through cryptocurrency – often, but not necessarily, one linked to the club in question – and the sports clubs often market them as offering buyers real-world benefits, including voting rights on certain matters.

And as Schembri pointed out, many of them do so through a Malta-registered company founded in 2018: Socios.

“Today this is a company worth around 3 billion euros,” he stressed.

The practice is not without controversy in the sports community, and its rooting in cryptocurrency opens it up to speculative practices that have made such currencies highly volatile in recent years. But with many leading football clubs joining the bandwagon, their supporters from around the world are now spending billions on these tokens, with a Malta-based company – which uses blockchain – at the heart of the practice.