Building the blockchain island

On 26 June, Malta’s Parliament voted unanimously in favour of the three Bills that were piloted by parliamentary secretary Silvio Schembri and his team. After months of consultation and tweaking, the Bills are among the most holistic sets of legislation t

not simply block the arrival of

T cars because the demand is clearly there. All these added his is yet another cars will go to block each other prime example of on the streets, raise tempers, Malta’s capacity to cause road rage and in turn fuel use its jurisdiction in demand for wider roads, overorder to carve out passes, underpasses, the lot. niche economic sectors. If we just

Things are indeed coming to a look around at the current ecohead. nomic pillars that sustain our

Now we can let everybody do economy and which include finanwhat comes naturally to them, in cial services and remote gaming, which case we will engender one would easily appreciate the more stress, more building power of regulatory vision and sprees, more cutting down of legislative frameworks that Maltrees, etc. Or else we, that is the tese legislators have had in the entire country, its government, past. Our present economic sucits sectors, can try and manage cess is also built on the strong this very complex situation. foundations that these sectors

What is certain is that we canwere built upon. not go on like this – this confuThe blockchain island vision has sion, this lack of control, where been built around the enactment everything seems to be happenof these three Bills. However, the ing at the same time. One would development of an ecosystem is perhaps accept all this if one not only dependent on the regulawere sure this is a one-off thing, tory frameworks. In fact, the legnever to be repeated, but we canislative dimension is just one of a not believe this will happen. number of factors that determine

There is simply no alternative the success of any ecosystem. to gradually put in place some As one can expect, having a general rules and then enforce vision and a strategy is key to them. When writing this we building any ecosystem. In this know this will never happen. We respect, one must say that the know that the Maltese situation Maltese government had a very is bedeviled by politics and these clear vision to establish Malta as bring about clientelism especialthe blockchain island and the setly when an election is looming. ting up of a task force, the publiSo we foresee that construction cation of the National Blockchain will go on and the destruction of Strategy and the enactment of habitats will continue. Are we these Bills are a strong testimony doomed to a life of more stress to this vision. and less environment? We do This vision needs to now permenot believe this. ate into the different levels of gov

Unfortunately, it will only be ernment and civil service. We truly when the bubble (for bubble it is) need a new era of governance and bursts and people get hurt that governing, one which is truly smart maybe we start yearning for a and digital. The blockchain offers different Malta. By that time it some unique opportunities for effimay be too late. ciency-gains and cost-reduction

Unless by some fluke, the powand government needs to now ers that be decide to bring about focus on revamping the civil servlaw and order and enforcement ice and ensure that it truly becomes regardless of person. a smart government. A lot of strides have been made in this regard, however, there is need for Standard Publications Ltd, a culture change within the government and civil service to truly embrace this new digital era.

The regulatory framework is also key to the deepening of any ecosystem. In this case, the regulatory element does not stop with the legislative acts. It is now crucial for the regulators involved, which include the newly set-up Malta Digital Innovation Authority, the MFSA and the MGA to deliver an efficient and quality-driven level of service to the industry. To this end, they require the resources and capacity to do so. Regulators must also foster an open dialogue with service providers and operators to ensure that feedback loops are present in the system.

The service providers also play a key role in developing the ecosystem. They will be the main touch point that foreign investors will face. They are the prime ambassadors of the jurisdiction and the responsibility is huge. It is therefore imperative that service providers respect the clients but also the jurisdiction itself and they must remain knowledgeable and always give professional advice. This brings us to another main determinant of the successful development of the ecosystem, education and human resources.

As Malta’s labour market remains buoyant, human resources are probably one of the most pressing challenges that the economy is and will continue facing in the foreseeable future. In a sector which is knowledge-intensive, skilled and trained human resources are essential for its future. Our educational institutions become critical in this.

The University of Malta is taking a lead in this however more efforts need to be taken to ensure that this sector and others will be adequately resourced in the years to come. Initiatives that were approved by Cabinet last week to bring over more third country nationals are also necessary to sustain Malta’s economy. However, this is not without its own challenges and a holistic plan for human resources and integration of foreign workers is needed.

Ecosystems also require support structures to operate effectively. In this case, the blockchain island requires a host of support structures which include an effective and supportive banking structure. Given that the sector will become regulated, it is expected that some of the main banks will service such an industry, however, Malta requires additional banking players, especially ones with good American correspondent banking facilities. In terms of financing and funding, there have been some positive announcements in this regard with a number of key players launching their own funds and financing facilities which will allow the development of a vibrant business community.

An ecosystem does not only depend on a regulatory framework, albeit it is central to its sustainability. The blockchain island requires further initiatives to truly materialise and this will continue being work-in-progress. However, Malta has already emerged as a pioneer in this fast-growing industry. It is now the responsibility of all stakeholders, public and private, to ensure that we truly live to the expectation of becoming the blockchain island.