In 2017, the term “blockchain island” was synonymous with Malta and reached the global rounds. Today it only brings back bad memories and misconceptions.
Admittedly, the term was unfortunate and disgusting. It misled the blockchain community into believing Malta was a safe haven and set off alarm bells among crypto-skeptics, sparking suspicions that Malta was becoming a port of call for money launderers and fraudsters.
The truth is, none of this was based on fact. On the contrary, just as with online gambling 20 years ago, the intention was to create a balanced regulatory framework that protects consumers and allows serious operators room to grow and prosper.
Have we made it? Not completely. But in a way we did. In fact, in 2024 the EU will introduce a new legal framework for cryptoassets that looks like a twin of the Maltese one.
They didn’t try to copy us. Nevertheless, whoever drafted the Maltese law was lucky or smart enough to choose the right model, the traditional EU framework for financial services. The bottom line is that in two years Europe will adopt something almost identical to the Maltese VFA framework. Ours is actually stricter.
Meanwhile, some of the biggest operators in the world have already established themselves here, three of which are today worth billions of dollars. A small ecosystem has survived the misunderstandings and our job now is to grow it in time to be a major market player by 2024. Now that we are out of the gray list, let’s seize the moment.
The government must update the legislation and adapt it to the EU’s Markets in Crypto Assets Regulations (MiCA). This must be done immediately if we do not want to lose. Professionals must recognize the risks associated with this industry and find out what is and is not desirable. It’s time for skeptics to realize that cryptoassets are a reality that won’t go away. That is why the EU and the US have decided to regulate it.
What you are probably asking yourself is: what does all this have to do with blockchain? Admittedly, blockchain and cryptocurrency are not the same thing. But they are not unrelated either. It would be like saying that SWIFT has nothing to do with money.
Blockchain is what allows cryptocurrencies to exist. The movement of crypto assets and the recording of that movement is the key function of blockchain. Most cryptoassets are considered cryptocurrencies, but some of the former are not used as the latter. Non-fungible tokens (NFT) are a good example. Others use the blockchain to record the history of high-value products (such as food and wine). Also in this case there is usually a movement of a crypto asset. We don’t hear much about this function because no one sees any reason to regulate this activity. You won’t find such crypto-assets on exchanges either. However, this does not mean that they are not crypto-assets and that they have no value.
In a digital world moving towards the metaverse and the need to authenticate digital assets, the blockchain will play a central role. Digital assets are easily reproducible, and while this is great for sharing knowledge and experiences, it makes it difficult to verify which asset is authentic and which is a copy. Blockchain is the means, and in addition it delivers an immutable log of all the assets’ historical movements, be it a document, digital art, a game avatar, ‘land’ in the metaverse and many other digital variations.
So the misinterpreted blockchain island is thankfully dead. But blockchain in Malta is still very much alive. There will be more in the near future. It’s a new reality you should get used to. Just as the internet swept away all skepticism about it in the early 1990s and is now central to our lives, the same will happen to blockchain and crypto assets.
Clearly, the crypto space is full of scams, just like the internet. However, this did not stop the world from moving most of its services online. And it won’t stop the digital world from moving to blockchain either.
Eventually we will use a “crypto-euro”, store our digital assets on the blockchain and we will trade and work with the metaverse. We have to adapt to this new world – literally. If we move early enough, Malta will lead the place like we did with games. If we don’t, we will be left behind. The foundation is already there. We just need to have the will to proceed cautiously but with determination.
This article was first published in the Times of Malta.
The content of this article is intended to provide a general guide to the subject. You should seek specialist advice about your specific circumstances.
