Public consultation on digital innovation authority launched

The parliamentary secretary for Financial Services, Digital Economy and Innovation Silvio Schembri last week launched a public consultation on the establishment of the Malta Digital Innovation Authority, the framework for the Certification of Distributed Ledger Technology Platforms and Related Service Providers.

Schembri explained that the aim of the proposed framework is to offer legal certainty to a space that is currently unregulated, and touches on a number of issues, including types of authorisations, legal personality and the applicability of law to smart contracts.

This legal framework will provide an environment conducive to the development of this technology and help position Malta as a natural destination for businesses that operate in this space.

The parliamentary secretary explained that the framework conceptualises the creation of a new Digital Innovation Authority, the voluntary registration of Technology Service Providers and the certification of DLT Platforms and related smart contracts as technology arrangements.

The framework also includes another new regime under the MFSA for the approval of ICOs and the regulation of certain serv- ice providers dealing with VCs, including brokers, exchanges, wallet providers, asset managers, investment advisors and market makers.

“This document is a result of extensive consultation and informal dialogues with interested parties, both locally and internationally. The new authority will have, among its roles, that of promoting innovation and fostering the creation of a successful ecosystem,” said Schembri, while explaining that the consultation document takes a three-step approach.

The first step is that of setting up the Malta Digital Innovation Authority, followed by a bill which sets out the legal regime for the registration of Technology Service Providers and the certification of Technology Arrangements. Thirdly, a bill that sets out the framework for ICOs and the regulatory regime on to the provision of certain services in relation to VCs is then drawn up. The intermediaries subject to the VC Bill include brokers, exchanges, wallet providers, asset managers, investment advisors and market makers dealing with VCs (to be issued by MFSA).

Schembri said that the document put forward for consultation is the base for the creation of a new economic sector that will be a great contribution to Malta’s economic growth.

A new industry, potentially as large as the iGaming industry, and capable of creating thousands of new jobs, will complement and reinforce other sectors and act as a catalyst for the creation or development of new economic sectors such as supply chain management and Fintech.

“This is the first framework of its kind in the world that will make Malta a leader in DLT regulation,” said the parliamentary secretary. The consultation period ends on 9 March and one may access the document at http://opm.gov.mt/en/Documents/FSDEI%20%20DLT%20Regulation%20Doc ument.pdf