Digitized trust : to what extent is Blockchain technology regulated in Malta?

Abstract

For any system to be fully operational, whether it is done through the use of traditional intermediaries such as banks, or by a decentralized mechanism based on computer algorithms, it must first win the trust of the society using it. The emergence of blockchain technology has introduced the challenge of shifting from the traditional notion of trust in physical intermediaries, to a trust embedded in a digitalized system of code. The disruptive potential of this technology, due to its open, permission-less and decentralised nature, may initially be seen as a threat to the effectiveness of any form of regulatory body attempting to enforce law. The aim of this study is to determine where Malta stands at the face of blockchain technology, what is the way forward to establish a practical regulatory framework, any emerging problems that must be addressed and how regulation must be adequately enforced in order to bridge the potential gap in trust between blockchain technology and society using it. This research examines the current legislative and regulatory framework that Malta has established together with the three blockchain laws, the roles and functions of the MDIA, the process of certification and the roles of the service providers; all of which serve to provide legal certainty and trust within the digitized system of blockchain technology. Further, this work continues to highlight the importance of striking a balance between guaranteeing this legal certainty through strict legislation whilst still allowing room for technological innovation.