In my earlier post Malta the Blockchain Island: The Story so Far I described the sequence of events that led to Malta to announce a legal framework governing Blockchain technologies; and that it was all guided by an overarching National Blockchain Strategy. In this post, I will highlight what thinking actually drove me to create and design that strategy.
The ideas underpinning the strategy can be visualized as follows:
Let’s look at each element in more detail.
Vision: Malta the “Blockchain Island”
The vision guiding the whole effort was that of transforming Malta into the “Blockchain Island,” with the ambition to:
Transform Malta into an Economic Superpower in the Emerging Crypto-Economy.
Note that “crypto-economy” shouldn’t be limited to crypto-currencies alone, but to the broader new dimension of economic enterprises that can work on top of cryptographic technologies, which typically are Blockchain technologies. By creating a legal environment where such enterprises can thrive, the idea is to attract those kind of businesses to the island.
Strategy: The Six Key Projects
The strategy that I originally proposed is composed of six key projects:
- Public Registries/Services on the Blockchain
- R&D, Education and Innovation with and on the Blockchain
- Appoint a Blockchain Regulator and create a regulatory infrastructure
- Regulate crypto-currencies/tokens, including exchanges and ICOs
- E-Residency and digital identity (of individuals and legal entities) on the Blockchain
- Smart Governance
As of today, the first six projects have been launched and are in course of execution. The fifth (E-Residency) is on the drawing board; while the sixth (Smart Governance) is yet to start.
1. Public Registries/Services on the Blockchain
Blockchain technologies can be used to improve the delivery of public services, and in particular the maintenance of public registries. A first instance of this is the Ministry of Education and Employment that, on September 22, 2017, announced that Malta will put academic records on the Blockchain. Other initiatives being considered are land registry records and electronic health records.
2. R&D, Education and Innovation with and on the Blockchain
The strategy put a lot of weight on education and knowledge. Educational institutions in Malta would be involved in order to start providing education on this subject at all levels. Foreign educational institutions would be approached and invited to set up in Malta and/or collaborate with existing institutions. In particular the educational effort should target academia in order to support advanced and innovative research on Blockchain technologies.
New fields of knowledge should be development, especially in the emerging field of “Legal Engineering” where Smart Contract technologies would be developed to support future needs of both Malta’s public services as well as the industry.
On October 9, 2017, the Government’s Budget for 2018 allocated funds to promote the use of Blockchain technologies; to create a Blockchain Laboratory and to promote a Blockchain Startup Hub, both under the Malta Information Technology Agency (MITA). MITA would also provide educational services about Blockchain technologies to any affected public service offices.
3. Appoint a Blockchain Regulator and create a regulatory infrastructure
Since Blockchain technologies are cross-industry in nature, and will impact all sectors of the economy, it is of vital importance that any regulatory action will not compromise or hinder the development of innovation. Limiting regulatory action to vertical sector regulators could create this sort of problem. A “360-degree” regulator would be put in place to promote an all encompassing adoption of Blockchain technologies in economic, public and social activities. Such a regulator would ensure that any other national regulator would not issue regulations that restrict the usage of the technologies in adjacent regulated sectors, or – even more so – in fields that are and ought not to be regulated.
4. Regulate crypto-currencies/tokens, including exchanges and ICOs
Malta, being a full EU-Member, needs to comply to the constraints of European supervisory bodies. The need to regulate crypto-currencies, and especially the activities of exchanges and funding vehicles of ICOs becomes necessary in order for Blockchain technologies to be broadly adopted in all sectors of the economy.
Certain key sectors of the Maltese economy, like the iGaming sector, need to be able to operate with crypto-currencies.
Likewise, all emerging innovative companies building Smart Contract applications and/or launching with ICOs need legal certainty as to what they are allowed to do, and under what conditions.
5. E-Residency and digital identity (of individuals and legal entities) on the Blockchain
Similarly to what Estonia has been doing in the last few years, the ambition is to offer E-Residency to individuals and legal entities.
Digital identity management is further seen to extend to the “Identity of Things” that will be an ever increasing need as the Internet of Things develops.
Furthermore, Decentralized Autonomous Organizations might also need to provide “identity” information under certain circumstances.
6. Smart Governance
One final key project that was proposed pertained to “Smart Governance,” seen as an outgrowth of broad scale application of Smart Contract technologies to Government and Public Services activities.
Goal: Blockchain Technologies are 10% of GDP by 2027
Based of projections from the World Economic Forum (in 2015), Malta’s National Blockchain Strategy has the goal of growing the economic footprint of Blockchain technologies so that by 2027 they will represent 10% of Malta’s GDP.