In 2018, Malta established itself as a global pioneer by passing three landmark bills that created a full regulatory framework for blockchain and cryptocurrencies. The move directly drew major exchanges like Binance and OKEx to the island, earning it the nickname “Blockchain Island.”
Setting the Stage: 2017 Strategy and Draft Rules
In April 2017, Malta formalized a “Blockchain Strategy,” becoming one of the first nations worldwide to do so, according to Prime Minister Joseph Muscat. By late October, the Malta Financial Services Authority (MFSA) proposed a fresh set of rules for cryptocurrency investment funds. A month later, the MFSA released a discussion paper seeking feedback on policies for ICOs, virtual currencies, and service providers, laying the groundwork for 2018.
Key Moves in 2018: Regulator Body and Exchange Migration
In February 2018, the Maltese government established the Malta Digital Innovation Authority (MDIA), tasked with overseeing the sector and providing “legal certainty” for new technologies. Digital Economy Parliamentary Secretary Silvio Schembri expressed a desire for an ecosystem that encourages operators to move to Malta. In March, Binance CEO Changpeng Zhao announced plans to open a fiat-to-crypto exchange on the island, partly due to pressure from Japanese regulators. On April 12, OKEx also revealed expansion plans to Malta. Meanwhile, the MFSA published a consultation paper outlining a three-stage test for distributed ledger technology (DLT) assets, determining whether tokens from ICOs could be classified as securities.
Three Bills Passed: World-First Regulatory Framework
Three bills were introduced and approved: the Virtual Financial Assets Act (VFA), the Malta Digital Innovation Authority Act, and the Innovative Technology Arrangements and Services Act. On July 4, 2018, they became law, with Schembri claiming it as a world first. The VFA regulates ICOs and requires detailed whitepapers and financial transparency. The MDIA act formalizes regulatory procedures, while the third act facilitates the recognition of blockchain-based enterprises.
Aftermath: Scholarships, Philanthropy, and Global Stage
Post-legislation, Malta accelerated blockchain initiatives. The University of Malta and the Malta Information Technology Agency (MITA) announced a €300,000 (≈$345,000) blockchain scholarship for students in ICT, law, finance, and engineering, funding master's and PhD theses. A state-backed charity, The President's Trust, partnered with the Binance Charity Foundation. Additionally, Tron and Binance each donated $100,000 to a Maltese charity. In a UN General Assembly speech, Prime Minister Joseph Muscat stated: “Blockchain makes cryptocurrencies the inevitable future of money… We have launched ourselves as the blockchain island, being the first jurisdiction to regulate this new technology.”