Blockchain Island 2 | How Malta Is Becoming a Global Capital of Crypto

In our first film about Malta, we asked students at the University of Malta a simple what do you know about blockchain and cryptocurrency? And maybe you remember that almost none of them knew anything?

I don't think so.

Blockchain islands.

No, no, I think most of us.

Don'T know about it.

I might be mistaken though it's hard to believe. But the situation has changed after the release of our first film. And this is how the media can change the public discourse. What's happened at the University of Malta? Well, we'll talk about that in a little bit. A lot has changed since our last visit to Malta. The the only thing that remains unchanged is the megalithic temples. They've been standing here for more than 5,000 years, even longer than the Egyptian pyramids. Some scholars believe that these are the oldest free standing artificial structures on Earth. Last time we were here we didn't have time to see the temples and this time we didn't expect to see this.

So now we're in the engine room of the first World War ship Russell and it's not the actual ship. As you can see, we're on the set.

Indeed we are on the set for a documentary film. And these decorations are an exact one to one replica of a ship from the first World War.

So everything is working. You can start the engine and it will start moving. We can have water splashes from all over the place, from the ceiling, from the bottom. During the filming we can do the fire the to show how the people used to work.

And here is a realistic recreation of a 35 meter long submarine which is also part of the set design. But it is still being built for the upcoming movie. To raise money for the film, this Malta based production company has even accepted some investments in cryptocurrencies.

Our latest project Russell was partly financed by the group of investors. With the cryptocurrency, we had around 1,000 bitcoins invested in our latest production.

At the moment the company is working on a massive project that will consist of 12 episodes narrating various shipwrecks that occurred in the Mediterranean Sea. But the company's ambitions are not limited to only film productions.

We have several projects in development stage at the moment. One of them is the online cinema platform where in order to register or to be able to watch the films, you have to pay in a cryptocurrency. This is project the project will be launched later this year. For the productions made in Malta, Maltese government is offering the cash rebate up to 27%. Which means that the money you spend on the island, you get back, which is the good reason for the big productions all over the world to come to Malta and make their movies Here on this island.

We have a very attractive tax regime, that's a known fact nowadays. But also as a government, we have an open door policy and, and we tend to describe ourselves as a disruptive government.

There had been a time when this building on the Castile Square was the house for the Knights of The Order of St. John, formerly the Most Venerable Order of the Hospital of St. John of Jerusalem. And this building has been called the Orbage de Castile or the Hotel of the Castile. In the 1740s, the building was completely rebuilt in the Baroque style with a rectangular layout and a courtyard. Named the best building in Malta, it now serves as the palace for the Maltese government. And here, one of the most promising and innovative crypto and blockchain related pieces of legislation in the world is being developed.

So on the 1st of November, as you know, the bills came into effect. Now the MFSA is in the process and I'm informed that in the coming days they will be issuing the first list of the VFA agents. These are the, so to speak, the gatekeepers. The first contact for applicants dealing in virtual currencies would need to hire in order for them to submit an application with the Malta Financial Service Authority, that is the regulator, which will regulate all stakeholders that have or are dealing with virtual currencies. We are also looking into other areas, for example, when it comes to land registry, when it comes to registration of renting contracts, in terms of housing, anything that has to do with registration practically, because registries are the prime use example for blockchain. And we are also looking into other areas, for example, when it comes to logistics and given our geographical position, the center of the Mediterranean, it's only natural for us to look into that direction.

The Maltese government has not stopped and is moving further. This year, the University of Malta has launched a degree on blockchain tech. And if earlier it was just several courses related to the emerging technology, now it has become a full time master's degree program.

And the idea behind it is to allow for different professionals to get specialization in their particular area, be it it, be it business and finance or be it law and regulation, but it also gives them an introduction to the other peripheral areas, because working in this industry, you really require the multidisciplinary expertise that makes up this exciting new field.

In October 2018, the government announced it was granting €100,000 to offer students a scholarship scheme so they can specialize in blockchain. The program is open to everyone and it has an interdisciplinary approach.

We will promote uptake in this particular master's not only but also in other masters and PhD programs. For this master's in blockchain and DLT, we are expecting to get somewhere between 20 to 50 students in the first year.

So for example, a lawyer enrolling in order to gain a better knowledge for the laws concerning cryptocurrencies will also get an introduction to the technology side of blockchain. So no matter what your discipline, this course will have something for you. By the way, what topics would you like to see a documentary about? Let us know in the comments. Now Malta is the first country in the world to issue education certificates on the blockchain. Last year it was launched as a pilot project for just a few weeks, but now this project extends to all educational institutions in Malta. So practically speaking, Malta is the only nation in the world where all education certificates are issued on the blockchain. Today the government is looking into other areas of services. For example, it is at a very advanced stage when it comes to the registry of companies.

So now companies or people who would like to register a company by end of this year would be able to do so through the registration process to have a certificate of their company on the blockchain and through processing methods using also AI.

In November 2018, the Virtual Financial Assets or VFA entered into force in Malta. In accordance with it, all cryptocurrency related projects must obtain a license from the Malta Financial Services Authority. Only then will they be allowed to provide legal financial services. Since last year, the MFSA has received several dozen applications for registration as agents of virtual financial assets.

As you are aware, crypto assets have for a number of years been mentioned as a vehicle for money laundering and financing of terrorism. Now as a jurisdiction we want to avoid that. So we decided to come up with the Agent proposal, the Agent Framework, which also has a role in this regard. To ensure that only the right people get access to our system, the agents will be doing the first set of checks and rejecting applicants that they find do not have the criteria to get a license. And then after the application is made with those applicants that have the right criteria, the MFSA will do additional checks.

Five months after the Virtual Financial Assets act or the VFA act entered into force in Malta, the domestic financial regulator approved 14 VFA agents. Agents are now obliged to evaluate their clients business plans to make sure they comply with regulations before applying to the.

Mfsa, basically the motto Digital Innovation Authority, will focus on the technology besides that, but we will also cater for innovative technology arrangements which do not fall under the virtual financial assets or the gaming like, for example, health, education, shipping, etc. Those, they can bring their technology arrangements directly to MDIA for certification. We will support and regulate the guidelines, you know, for the systems auditor, but we will also directly certify other innovative technology arrangements that come directly to us.

After spending some time trying to understand the government's perspective, we wanted to see what the business community thought about the future of the industry here in Malta.

So I think that right now, in this kind of slow period that we've had in 2018, it's been positive in the sense that it's allowed us to build a solid foundation and to begin to prepare ourselves for the coming years. And so I think that we're well poised to take advantage of that. And despite the fact that it was slow, in general, I think that the future looks bright. Without a doubt.

I think the people generally are open to new technology. There's been a big shift of gaming companies coming here now, more blockchain companies. There are a number of companies here that we're aware of that will accept cryptocurrency as payment. Some very simple shops. There's a jewelry shop that will take bitcoin and payment and others. So they're starting to get used to the idea.

I'm a seventh generation here. The business began in 1804 and we've been selling jewelry and watches for decades now. So we have started to accept cryptocurrencies such as Bitcoin Zechetra since last summer of 2018. And so far we've got some successful feedback from such clients. Potential clients you can can say.

Is the popularity of cryptocurrencies affected your business?

Yeah, there's been high demand for many hot watch pieces, some Alta G as well. So it's been good. Can't complain.

From last year.

We accept cryptocurrencies.

You can buy VIP diving.

We're going to take you to the depths of Malta.

Last year in November, there was a.

Blockchain summit in Malta. We sold two trips for submarine VIP.

Diving on this event.

So this was the first time we.

Encountered blockchain and cryptocurrencies within our business.

To become commonly known as Blockchain Island. Malta has organized several major crypto conferences. Delta Summit 2018 was one of the most successful among them.

The summit was born out of the fact that we have regulated this new space and we want to showcase to the world what we've done in Malta, but also try to attract some of the world's best thought leaders, innovators, pioneers, entrepreneurs and minds, and get them all under one roof to share their ideas, insights, strategic foresight of how this industry is going to evolve in the next couple of years. Show them what we've done, but also learn from their valuable experience and at the same time create a structure where businesses thrive and we can form some kind of B2B relationship between all these companies that are innovating in the blockchain space. It was something that lacked at the time.

It's part of Europe. A lot of the legal structures and financial structures that need to be in place are in place. As you will have seen, there's a lot of development and building work around St. Julian's in Valletta, but the pace of life is a little easier than some of the major financial centres. So if you want to concentrate and focus on core activity with fewer distractions, we find Malta a very good place to be for that.

What we have done is that we have looked at our successful past experience of the gaming industry for the past 15 years and we have emulated what we have done to this industry. They are basically two technological products, two financial products, in a way, and we have used that experience and implemented, implanted it here as well.

So it all sounds quite optimistic and we wish the island luck. Meanwhile, the megalithic temples continue to stand. They haven't changed for thousands of years, but around them a lot has. Stay tuned if you want to watch more documentaries like this, like press the bell and share this video with friends. With your support, we can continue making such films.