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bring sanity to the frenzy of the blockchain island?

Malta's Digital Innovation Authority (MDIA) was established under chapter 591 of the Malta Law, Malta's Digital Innovation Act, which came into force on 1 November.

MDIA is the main authority responsible for promoting all government policies that promote Malta as a center of excellence for technological innovation, establishing and applying standards that ensure compliance with any other international obligation. MDIA aims to promote, promote and facilitate the progress and use of innovative technological devices and their design and use.

It also seeks to promote education on ethical standards and the legitimate exploitation of innovative technological devices. The role of MDIA will mainly consist in providing formal recognition and regulation of the relevant innovative technological provisions and related services. In order to understand the meaning of innovative technological agreements and innovative technological services, it is necessary to consult chapter 592 of the laws of Malta, entitled the Law on Innovative Technology Services of 2018.

Regarding the agreements of innovative technology, the first list of this law establishes the following: "We consider innovative technological devices for the purposes of this law: software and architecture used in the design and supply of DLT routinely, but not necessarily: use a book mastro distributed, decentralized, shared and, or replicated, may be public or private or its hybrids, is allowed or allowed less or hybrids thereof, is safe at a high level against retrospective tampering, such that the transaction history it can not be replaced, it is protected with cryptography and is verifiable, smart contracts and related applications, including decentralized autonomous organizations, as well as other similar agreements, any other innovative technology agreement that can be designated by the minister, on the recommendation of the Authorities, from time to time with prior notice ».

In essence, a blockchain would fall within the definition of an innovative technological agreement, however its certification by the MDIA is voluntary. However, this does not rule out the possibility that any other regulatory authority, such as the Malta Financial Services Authority (MFSA), may require certification of a particular innovative technology agreement. As regards the definition of innovative technological services, the second table of the same act outlines: "The following services are considered innovative technological services for the purposes of this Act: the auditing or auditing services referred to in this law with reference to the provisions technological innovations provided by the systems auditors, the technical administration services referred to in this law with reference to the innovative technological provisions provided by the technical administrators ».

The above authorization will be valid for a period of two years. MDIA will also establish a register containing a list of all holders of innovative technology authorizations and compiling a second list indicating the reasons for refusing applications, the information of which will be stored on its website for three months.

The role of MDIA to certify innovative technological devices and innovative technological services will be undertaken in full respect of the importance of not hindering innovation and the efforts and potential of the start-up sector in this innovative technology sector. , while ensuring that there are standards in place for consumer and investor protection, market integrity and public interest in general. In this regard, MDIA has already issued a series of guidance notes aimed at assisting service providers and applicants with innovative technological provisions when approaching MDIA for registration and certification respectively.

The role of regulator of MDIA will include, among other things, the granting, issuance, refusal, revocation, cancellation or suspension of authorizations in relation to the provision of innovative technological devices or services. supplied to or from Malta. Regarding his supervisory role, he will keep under control all the practices and activities that will be regulated by the innovative technology and services system. Furthermore, it will have the power to investigate allegations of practices and activities harmful to consumers and to establish when innovative technological agreements and services are exempt from particular legal requirements.

MDIA must at all times coordinate with other competent authorities such as the Malta Financial Services Authority, the Malta Gaming Authority, the Information Technology Agency of Malta, the Competition Authority and Consumers of Malta and the Malta State Authority in order to ensure that there are no replication of work and controls. Effective co-operation between the Authorities and the other competent authorities will be ensured by a newly established board called the "Common Regulatory Efficiency Committee".

Franklin Cachia is a senior associate at FFF Legal.

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