What is Blockchain?
Blockchain or Distributed Ledger Technology – DLT is essentially a database that is shared across a network that maintains an immutable record.
Security and accuracy of the database is ensured by cryptography and the use of ‘private keys’ and electronic signatures.
What are some of its concrete implications?
The application of DLTs are manifold, ranging from
- Improving the efficiency and accuracy of financial transactions, such as payments, clearing and settlement;
- Reducing costs of maintaining legal databases such as land and property registers;
- Creation of a digital identity with which citizens will be able to transact in a quick, secure and transparent way;
In essence, the internet provided us with a free and publicly accessible flow of information, whereas Blockchain – DLT aims to enable the unrestricted and transparent flow of value.
Being a rapidly developing technological advancement, it is essential to keep up to date from both a technical and regulatory perspective.
Which is the most advanced Country from a legal point of view?
In Europe, Malta is the first country to officially make a significant step towards regulating DLTs.
Earlier this year, it legally recognised smart contracts (codes on the blockchain with specific uses) and created a new type of legal entity called Technology Arrangements – TA that serve as the legal framework for defining the rights and duties of Distributed Autonomous Organisations – DAO on the blockchain.
One can think about TAs as limited legal entities on a DLT.
Recently, this country, commonly referred to as “Blockchain Island” unanimously approved three bills that are now under Presidential approval:
The Innovative Technology Arrangements and Services Act;
The Virtual Financial Assets Act;
The Malta Digital Innovation Authority Act;
This way Malta managed to attract a dozen of blockchain businesses by removing regulatory uncertainty that hinders business development in other countries.
The advances of this technology are comparable to a real technical revolution.
It is vital that governments adapt quickly to this technology in order not to hinder business activity.
Should you need legal assistance in this specific field or on the recent avant-garde regulations of Malta, please do not hesitate to contact us.