In 2017, the term 'blockchain island' was synonymous with Malta and made the global rounds. Today, it only brings back bad memories and misconceptions.
Granted, the term was unfortunate and egregious. It misled the blockchain community to believe that Malta was a haven and set off alarm bells among crypto sceptics, sowing suspicions that Malta was becoming a port of call for money launderers and fraudsters.
The truth is that 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 protecting consumers and giving serious operators the room to grow and prosper.
Have we managed to do that? Not quite. But in a way, we did. In fact, in 2024, the EU will introduce a new legal framework for crypto assets that looks like a twin of the Maltese one.
They didn't try to copy us. Yet whoever drafted the Maltese law was lucky or indeed smart enough to choose the right model, the traditional EU framework for financial services. The bottom line is that in two years' time Europe will adopt something almost identical to the Maltese VFA framework. Indeed ours is stricter.
In the meantime, some of the largest operators in the world have already set up shop here, three of which are today worth billions of dollars. A small ecosystem has survived the misconceptions and our job now is to grow it in time to be a key market player by 2024. Now that we are off the grey list, let's seize the moment.
Government needs to update legislation and align it with the EU Markets in Crypto Assets Regulations (MiCA). This has to be done immediately if we do not want to lose out. Professionals need to acknowledge the risks associated with this industry and determine what is and is not desirable. It is time for sceptics to realise that crypto assets are a reality that will not go away. That's why the EU and the US have decided to regulate it.
What you're asking yourself is probably: what does all this have to do with blockchain? Granted, blockchain and cryptocurrencies are not the same things. But neither are they unrelated. That would be like saying that SWIFT has nothing to do with money.
Blockchain is what allows cryptocurrencies to, well, exist. The movement of crypto assets and the recording of that movement is the key blockchain function. Most crypto assets are considered as cryptocurrencies, but some of the former are not used as the latter. Non-fungible tokens (NFTs) are a good example. Others use the blockchain to record the history of high-value products (such as food and wine). In this case, too, there is usually a movement of a crypto asset. We do not hear much about this feature because no one sees a reason to regulate this activity. You will not 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 that is moving toward the metaverse and the need to authenticate digital assets, the blockchain will play a pivotal role. Digital assets are easily reproducible and while this is a great thing for sharing knowledge and experiences, it makes it difficult to confirm which asset is authentic and which is a copy. Blockchain is the remedy and, in addition, it delivers an immutable log of all the assets' historical movements, whether it's a document, digital art, a gaming 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 and kicking. It will be more so in the near future. It's a new reality that you should get accustomed to. Just like the internet swept away all the scepticism about it in the early 1990s and is now central to our lives, the same is bound to happen with blockchain and crypto assets.
Clearly, the crypto space is full of scams, just like the internet. This, however, 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 be using a "crypto-euro", store our digital assets on the blockchain and we will shop and work on the metaverse. We need to adapt to this new world - literally. If we move early enough Malta will lead the space as we did with gaming. If we don't, we'll be left behind. The foundations are already there. We just need to have the will to go forward cautiously but with determination.
This article was first published in the Times of Malta.
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