Navigating The National Blockchain Waters of Blockchain Island, Crypto Nation, and China
When it comes to regulatory uncertainty and blockchain technology, fewer things have stymied its progress. It’s very easy to assign blame to hostile governments who are hesitant to adopt unregulated ICO’s and the cryptocurrency space, but the perspective becomes something else entirely when you look at how tentative these international governments have been in its remedial actions.
The story of these regulatory shifts yields some very interesting insights into the future of crypto and whether governments, domestic and/or international will ever fully embrace it. Legislators and economists, as well as the financial and cybersecurity sectors, have been divided as to how to treat cryptocurrency: whether it’s just a flat-out problem or whether it could become a potential growth area.
Two countries, Malta and China, for example, have the most curious regulatory environments seen, as they balance the capriciousness of the Chinese government with the enthusiasm of the Maltese government.
Welcome to Blockchain Island
No government has courted crypto with such enthusiasm as that of Malta, as evidenced by the historical move the Maltese Parliament took back on July 4th. Establishing the first regulatory framework for blockchain, cryptocurrency and DLT (Distributed Ledger Technology) on Wednesday, Malta has become the first country in the world to provide an official set of regulations for operators in the space after passing 3 bills into law.
Bill #1 –Malta Digital Innovation Authority Act (MDIA Act)
Bill #2 –Innovative Technology Arrangement and Services Act (ITAS)
Bill #3 –Virtual Financial Assets Act (VFAA)
These three acts, together, work to provide a comprehensive regulatory framework for the industry, where other countries can either follow and/or model from.
Further analyzing the Virtual Financial Assets Act (“VFAA”), will enable the country to regulate all ICO’s and cryptocurrency activity throughout the country. By setting out the terms and provisions in such a forthright manner, Malta is signaling to the world that it is willing to identify, locate, and ensure a safe and stable crypto business environment for its people.
In demonstrating its seriousness towards regulation, Malta has also seen the potential benefits associated with integrating blockchain technology into the public services sector, emphasizing the need to promote transparency, while decreasing costs and cutting out bureaucracy.
The Island Has Been Forming For Some Time
Even before this move, Malta has already demonstrated its love for the crypto space. Initially reported by Bloomberg, Malta has already lured the two of the largest cryptocurrency exchanges in the market to its island—Binance, and OKEx. Indeed, Malta is not just courting these blockchain start-ups to relocate to its island, but it’s utilizing these technologies for its own growth and development.
Back in May, Transport Minister, Ian Borg, announced a partnership with Omnitude, a multi-enterprise blockchain middleware platform, that it would soon see the power of decentralized ledger technology being used throughout Malta to help increase the efficiency in the country’s public transport network.
“We believe in Omnitude’s blockchain technology and its broad use-cases for the government,” said Borg. “We can see its potential in a range of government departments, and it will form a cornerstone technology platform as part of our commitment to drive forward innovation. It will [also] improve the quality of life and enhance access to information for Maltese citizens. [This] technology is a key part of our overall national technology strategy that will see us transform different sectors.”
Uncertainty in the Chinese Market
Switching gears, the Chinese market provides a stark contrast to that of Malta’s approach. If you recall, China announced a country-wide freeze on all ICO’s, with the purpose of halting the spread of cryptocurrency technology entirely.
Despite the country-wide ban, China has since stepped back from its initial skepticism, as the ICO freeze has seemingly fallen by the wayside. Why? According to Chris Painter, CEO of Omnitude, it seems the government is warming up to some of the potential benefits the technology brings. For example, the Chinese government has recently supported a $1 billion blockchain fund in order to launch start-ups—many of which originating from the blockchain space.
Adding to this, the Chinese Ministry of Industry and Information Technology, recently published its Inaugural League Table of public blockchain projects and cryptocurrencies, ranking them based on three criteria—technology, application, and innovation. It shouldn’t come as a surprise that Ethereum’s blockchain makes the top of the list.
How Has Switzerland Influenced The Market?
Switching gears to Switzerland, or ‘Crypto Island’ as the federal counselor, Schneider-Ammann announced in January, the country holds its ground as one of the leading countries in the crypto and blockchain space. With the support from the federal government, the blockchain and crypto communities are encouraged to start their own ventures.
Voting and Elections
Despite the circulation of fake news claiming that Swiss-based company, Agora, helped Sierra Leone become the first country in the world to utilize blockchain technology in its presidential election, Agora workers did manually record the voting tallies on a private blockchain, which is fairly significant to show that this was a first for this technology being somewhat incorporated into the electoral process. Unfortunately, any rumors or news headlines claiming that Agora participated or had any involvement with the vote count is inaccurate and has been retracted and corrected in a statement by the company.
Yet, this technology could eventually prove to be a milestone, especially in the current political climate where the U.S. has currently recognized its susceptibility to voting and elections fraud.
Turning to another example, The Crypto Finance Conference (CFC), with its audience of UHNW-investors, family offices, and funds helps to shape the future of technology and Switzerland’s approach to space. This exclusive investor conference requires every application submitted be screened and those accepted are hand-picked and invited to participate in the conference.
Like Malta, countries will continue the trajectory and paths that these countries provide because of the experience and industry-friendly regulations. Even if some countries pass regulations faster, Switzerland will be able to continue establishing and setting standards not just for its people, but for the rest of the industry.
Can Space Be Truly Harmonized?
Regardless of the contrast in these approaches, Malta, China, and Switzerland are beginning to undergo and see tremendous benefits because of their willingness to ascertain the technology and keep the government involved, even in a limited capacity.
Following the recent governmental responses as to cryptocurrencies and blockchain technology, it seems this is a technology that national governments cannot simply ignore. The crypto genie is out of the bottle, and rather than try to push it back in, these countries stand as a model representation of how much there is to explore by attempting to embrace and regulate it.
Andrew is a Forbes Contributor, former contributor for The Merkle, former Huff Post contributor. He also works as a consultant for ABC, CBS, FOX and NBC across Dallas and Ohio on the latest news in the technology law realm. He has been quoted in many Forbes articles and featured in national stories across the countries such as Cheddar on GDPR, and on podcasts such as Lawyer 2 Lawyer, Thinking Like A Lawyer, TheLegalTool Kit, and This Week In The Law.