Malta’s Government: “Our Next Step is Blockchain”

3230395163_cc25a84383_b

Red Herring recently reported on the small but burgeoning tech scene evolving in Malta, one of Europe’s smallest nations. Keith Abela, of the country’s financial services, digital economy and innovation secretariat outlines Malta’s financial and iGaming sectors, attempts to harness domestic and international talent, and how the country wants to exploit emerging blockchain technology, to stay ahead of the game.

How did Malta’s banking economy weather the Eurozone crisis so well, and how is it ensuring its protection against further global financial crises?

We were fortunate enough that our banking institutions were not exposed to the sub-prime mortgages, either directly or indirectly, as many other banks in the European Union. Local banks were also relatively conservative compared to the majority in other member states and during the crisis that worked in our favor.

Most of our public debt had a long term maturity and is locally owned so we were not exposed to liquidity problems. Since then, together with our European partners, we continued to strengthen our banking and financial system through better regulations and more prudent practices. During the last four years, the Government has also looked to diversify our economy, amongst other, by attracting private investment in both health and education sectors.

How has the government attracted betting companies to its shores, and are there improvements to be made ensuring they stay in the country?

The sector operating in Malta today is significantly different from that of 10 years ago. Initially based on an attractive tax system, it now benefits from one of the most complete eco-system in the world. Firms in the sector benefit from a talented pool of people plus excellent support in terms of ancillaries inputs.

We are now actively exploring the use of crypto currencies for this industry which we believe will provide it with fast and cost-effective alternatives to traditional payment mechanisms. The Malta Gaming Authority has evolved in order to provide a professional support service to iGaming companies wanting to start an operation in Malta an to facilitate further development of existing companies.

Are there any particular areas of technology or science in which Malta should take a lead?

As a country we have a track record in being extremely good at adapting ourselves to new developments. We managed to restructure our financial services sector in such a way as to remain attractive, while being fully in line with both the EU and the OECD.  More recently, Malta saw the development of cell companies in insurance and securitization and the notified Alternative Investment Funds.

We believe that the next step is to make the most of blockchain technology. Our vision is to offer the best possible legislative framework to place Malta as a top jurisdiction that attract firms working on and developing blockchain technology. A jurisdiction that not only facilitates this technology but also actively advocates them.

What can the country do better to ensure more young talent reaches Malta’s tech scene?

For a country with no resources except its own people, developing young talent is fundamental. Government is supporting the University of Malta and other institutions to look at the needs of tomorrow by having a close working relationship with the industry. In this regard, there are university courses that focus on ICT, Financial Services, the Pharmaceutical industry and iGaming.

Despite that this approach has served the economy well, we need to build a culture that encourages innovation from an early age. We must also continue to attract the right talent to our shores by conveying the message that Malta is open for business for both firms, entrepreneurs as well as employees. Malta is well connected within Europe, is a member of the EU, has a strong financial services sector, is registering a significant economic growth year in year out, enjoys favorable weather all year round and is considered as one of the best places to live and work in.

Are there any legislative changes yet to be made?

Two of Malta’s main industries are the financial services and the iGaming. Both have evolved during the years and while they were initially attracted by a very competitive cost structures nowadays they are benefitting from a complete set of infrastructure that is very conductive to their needs. For example, a whole sub-sector specializing in software has evolved to support the iGaming industry. We need to constantly reassess the opportunities and threats facing the industry and act on them by seeking a forward-looking repositioning.

In terms of legislation we have recently launched two consultative documents one on the iGaming that aims to further streamline regulations, and to narrow the gap between new technology and current legislation. The regulatory scope of gaming services under the new legislation shall be wider and more coherent, meaning that all activities falling under the MGA’s governance remit will be subjected to a licensing requirement.  

The other document concerns the strengthening of the Malta Financial Services Authority which is inviting feedback from stakeholders on how make the authority more relevant to today’s changing environment.