The cryptocurrency market has encountered a lot of debates and uncertainties for the last couple of years. Many authorities claim that cryptocurrencies as a whole have been the breeding ground for illegal activities and financial insecurities due to their unclear regulation in many countries and user anonymity. For instance, it has previously been associated with illicit activities such as money laundering, tax evasions, and terrorism funding. As a result, many states have been striving to enforce high standards of clear regulations so that cryptocurrencies can effectively work under regulations.
According to information sources such as Karl Schranz, many countries have been coming up with their versions of crypto laws. That is given the notion that if well-regulated, digital currencies and blockchain technology can kickstart substantial economic growth and revolutionalize global financial markets. Leading in the efforts to bring regulatory clarity surrounding cryptocurrency has been the small island of Malta. With a small population of around 500,000 people, Malta has taken an early lead in innovative blockchain technology and shown the other world crypto markets how crypto regulation can positively impact economic growth.
Early last year, Malta passed three laws that set a regulatory blueprint for cryptocurrencies, blockchain, and distributed ledger technology (DLT). Maltese regulations are one of their kind, and they not only focus on cryptocurrencies and blockchain technology but also regulate how exchanges, brokers, and traders engage with the crypto industry. The three laws include:
Malta Digital Innovation Authority (MDIA)
MDIA is the centralized authority that controls technological development, which encompasses blockchain technology and cryptocurrencies. It ensures streamlined processes and ethical standards when using cryptocurrencies and blockchain technology. The government initiated this law to assure investors that they are engaging with a credible and legal crypto platform regulated by the government. MDIA has the responsibility of vetting any cryptocurrency activities, including companies, businesses, and individuals. Following that, this supervisory body tracks trends and is supposed to make amendments to the act when need be.
Innovative Technological Arrangement and Services act (ITAS)
ITAS controls the accountability and future registration of blockchain service providers, which includes cryptocurrencies. It does that by imposing audit requirements that ensure cryptocurrencies operate under stricter rules. This authority provides the basis on which the law recognizes all the approved blockchain utilizing companies.
Virtual Financial Asset Act (VFAA)
VFAA applies to all the cryptocurrency exchanges, wallet services, initial coin offerings, asset managers, brokers, and advisers. It aims at protecting investors, its financial stability, and the market as a whole. The law outlines specific conditions that every cryptocurrency company looking forward to setting up in the country should meet and other laws that other digital currency service providers must meet. It includes ensuring that every ICO or any blockchain has prepared documents like roadmaps in advance that outline the token’s practical applications.
The three laws are intertwined and work together towards regulating cryptocurrencies and the blockchain technology-related activities in the country. Joseph Muscat, the prime minister of Malta, believes that regulating cryptocurrencies positively impacts an economy and hopes that Malta can become the linking digital currency hub between the east and the western markets.
Since the regulatory change has already made Malta a leading destination for big cryptocurrency companies, it is expected to spur economic growth by creating more job opportunities. Due to the low tax rate (5%), international cryptocurrency companies and businesses quickly establish themselves in Malta, a significant economic leap for the small island.