Crypto is the Millennials’ Rock’n’Roll” says Stephen Castell, ”and Dr Joseph Muscat, the Malta Prime Minister, has emerged as the world’s top crypto rocker, bravely positioning his beautiful sun-kissed sandstone island country, Chair of the Commonwealth, and President of the Council of the EU, as the leader in regulating Blockchain applications, ICOs, cryptocurrency trading and, more widely, digital innovation”.
But will the enactment of three new digital economy laws in Malta*, intended to protect customers and investors, turn out simply to be a futile attempt to regulate the unregulatable? Castell thinks there is a good chance that this will be the outcome: “Experts know that computer software and systems are provably ontologically unreliable and unprotectable. Basing new applications, let alone digital investments and virtual assets, on supposedly cryptographically-secured Blockchain architecture does not magically alter that fundamental technical truth. Furthermore, the idea that ‘digital innovation’ can possibly be controlled and licensed will be scoffed at by many wildly-creative computer software coders. And bear in mind that there are as yet no ISO technical standards for Blockchain”.
Castell however applauds this daring play by Malta to become the Blockchain Island. “The key to bringing cryptocurrencies into the community of acceptable protectable investment instruments, as Malta has realised, and now stunningly implemented, is to create a legal structure, and due diligence assessment protocols (including KYC and AML checks) authorising Trusted Third Parties (TTPs) who will be held accountable. TTPs can potentially be sanctioned, fined or de-authorised by a Regulator, and sued when anything goes wrong – just like other companies such as banks, funds, brokers and promoters handling and seeking punters’ cash and investment in company shares, bonds, property and regular currencies. You cannot sue a piece of Blockchain-based software, or consensus-written data hashed in a block. But you should certainly be able, for example, to bring court action against an altcoin exchange licensed by the MDIA if it loses your money through being poorly managed and capitalised, or trading a scam utility token, or promoting a shoddy suspect ICO, or simply lacking proper financial governance and reliable cybersecurity systems. Malta’s MDIA initiative is a welcome development and I for one will be exploring becoming a Registered Systems Auditor under its new ITAS Act”.
The MDIA is led by CEO Stephen McCarthy, a CPA, once Finance Director of Greenpeace Mediterranean, and formerly serving as CEO of the Malta Housing Authority. The MDIA launch by Malta’s crypto rock star PM Joseph Muscat, and his Buddy Holly-lookalike Junior Minister for Financial Services, Digital Economy and Innovation, the Hon. Silvio Schembri, coming from the former British Protectorate that is currently Chair of the Commonwealth of 53 sovereign states still paying allegiance to the British Crown, is a Blockchain bastion glaring, sun-drenched, in the face of the UK Government.
The HoC Treasury Select Committee’s recent call for the UK Government to introduce rules to ensure cryptocurrency investors get regulatory protection, and ‘end the cryptocurrency Wild West’, was at last UK Parliamentary recognition of the rise and potential importance and beneficial impact of the new crypto-economics. Since the 2008 crash, which callously cut the financial and aspirational legs from under a whole generation of Millennials, and exposed traditional financial markets’ regulation for the row of beans that it sometimes still is (despite the supposedly reassuring oversight of bean-counters), the Millennials are getting on with imagination, technical skill, energy and enthusiasm in pioneering these new wild prairies of digital wealth-creation.
Britain’s Millennials are as crypto-active and productive as any and, whilst some may perish, with hackers’ arrows in their backs, they afford post-Brexit Britain a great crypto-opportunity. The paradox is, if there is to be Government regulation, then, as Malta has now pioneered, that will effectively have to bring cryptocurrencies into line with other serious investment instruments based on TTPs – striking at the very heart of the much-vaunted ‘trustless’ Blockchain software architecture on which Bitcoin, and other altcoins and crypto-tokens are intrinsically operationally and technically dependent. “However, without TTPs regulation” Castell cautions, “it is difficult to see how cryptocurrencies can be brought into the portfolio of lawful, trusted investments. Meanwhile, of course, no-one should expect, or wish, their Pension Fund contributions to be crypto-invested”.
Castell concludes: “For over eighteen months, the Maltese Government was working on the first-ever regulatory framework for DLT platforms and virtual assets. The Malta Delta Summit last week impressively featured an EU Prime Minister ‘talking crypto’ like he knew what it meant (Mrs May are you listening?), and involving all of Malta’s main regulatory bodies. The new Blockchain laws, giving authority to the MDIA, came into effect from the 1st of October: any putative Blockchain start-up company, software and systems provider, ICT consultant, venture capitalist, or DLT or Smart Contract applications developer should be booking flights asap to Valletta, the 2018 European Capital of Culture – and now also Capital of Crypto. The UK has itself missed becoming the Blockchain Island, but, taking a delicious pastizz from the Maltese, a similar UK-Government-led British Crypto-Summit is clearly overdue”.
*Malta Digital Innovation Authority Act (MDIA Act) Innovative Technology Arrangements and Services Act (ITAS Act)
Virtual Financial Assets Act (VFA Act)
Dr Stephen Castell CITP CPhys FIMA MEWI MIoD in conversation with James Bowater at the Malta Delta Summit, 03-05 October 2018. https://delta-summit.com/
Dr Castell is an award-winning international independent forensic ICT consultant and expert, and in the 1980s a founder of the UK’s OTC Share Market for new technology-based firms.