The announcement was made by one of the country’s leading blockchain advocates, Silvio Schembri, who is the Parliamentary Secretary for Financial Services. Visiting the Registry, he said; “Through an extensive investment in IT, the Registry of Companies will be more efficient, and will lessen unnecessary bureaucratic procedures. It will be run by a system which will handle all the processes performed by the Registry. The new system will make possible the provision of new services, which with the present system are not being provided, making the agency the first in the world to be run on a blockchain based system.”
The migration of the Registry’s systems comes at a busy time, with company registrations in Malta having increased by 55 percent in just six years. The country has become a major destination for companies operating in the online gambling, gaming, and technology sectors.
The Company Registry announcement comes two years after Maltese Premier, Joseph Muscat, said that the Mediterranean island would become a hub of blockchain technology. It was the first country to establish a full regulatory framework for this sector and attracted major players in the cryptocurrency market; such as Binance, one of the global leaders, who relocated to the island following regulatory restrictions elsewhere. This exchange has been followed by other major exchanges; for example, Nebula, BitBay, Alphahex, and more. The result has been a massive increase in the trading volumes passing through Malta, with 56.1 billion dollars being traded through Maltese-registered exchanges in March 2019 alone. In July 2018, the Maltese Government passed three bills into law, for cryptocurrencies, Distributed Ledger Technology (DLT) and blockchain.
Valletta’s belief that blockchain holds the key to significant economic growth has not been without its critics, most notably, the International Monetary Fund (IMF), who said the country had exposed itself to potentially being used for terror financing and money laundering, as a result of its drive toward attracting cryptocurrency and blockchain operators. According to the IMF, The Maltese Financial Services Authority (MFSA) will be put under strain, by the “increasing number of financial entities under supervision, the rapid development of new products, the evolving regulatory environment, and the tightening of the labour market”.
In an interview in Forbes Magazine, in summer 2018, Silvio Schembri said that the Maltese Government was committed to a set of principles, based on EU laws, in relation to regulating blockchain technology. “For instance, there are three basic core principles that we abide to -market integrity, consumer protection, and industry protection. We have based all of our recent laws on these principles, with the aim to bring legal certainty to an environment that is unregulated. This also allows our bills (regulatory framework for blockchain) to flourish, since we take a principles-based approach, rather than a rules based approach. That is why Malta is in a situation today where the biggest players in the market are looking to launch here.” he said.
The initiative that Joseph Muscat’s government launched in 2017, to promote the island as a blockchain hub, was spearheaded by a task force, which reviewed how blockchain could be used in an administrative fashion on the island. Effectively increasing its knowledge of the sector – and how to attract global blockchain and cryptocurrency operators to its shores. They piloted the storing and distribution of educational certificates, and accreditations on blockchain; and according to the pilot project, this could also be expanded to incorporate other records, such as marriage certificates and birth certificates, and even refugee applications. The recently published European Commission paper ‘Blockchain for Digital Government’, said that the Maltese authorities were looking at the possibility of storing credentials for refugee applications on blockchain systems. These could then be used for verifying identities, and recording where in the EU, social aid and social services had been accessed by refugees, or those seeking asylum.