A public consultation document was launched today by the Maltese government with the aim of restructuring the MFSA to pave the way for the further digitalisation of and innovation in the financial sector.
The Hon. Silvio Schembri, Parliamentary Secretary for Financial Services, Digital Economy and Innovation expressed his hope that once the MFSA is restructured it will be better prepared to regulate , cryptocurrencies and innovative financial products which are increasingly coming to the market, including financial products built using block-chain technology.
Mr Schembri remarked this morning that “the risk of allowing the industry to tap new niches may be contained if there is the right synergy between those willing to invest and the regulatory authority to create products that actually reduce such risks”. His comments are in line with comments made in recent weeks by the Maltese Prime Minister in the sense that technology, including new currency systems should be embraced and the risks associated with their used minimised by use of sensible regulation.
If this is indeed the path which this consultation process will lead to, it is to be welcome.
It appears from this morning’s statements and media coverage since that the consultation process also aims to encourage feedback about the restructuring of the MFSA. Once the process of consultation is complete a new Chairman of the MFSA will be appointed to replace Professor Joseph Bannister, who has steered the MFSA for around twenty year.
The consultation process is set to be complete by the end of the year and it appears that changes in the law to implement the results of this consultation process are to be expected next year.
There is of course a timing issue with respect to embracing, and indeed regulating cryptocurrencies, if Malta wants to have some sort of competitive advantage in this area. We hope that bundling the regulation of cryptocurrencies with a broader reform of the financial services sector will not further delay the regulation and licensing of well-run cryptocurrency exchanges and formal recognition of cryptocurrencies as a unit of monetary value. It seems to us that both technology intensive businesses operating from Malta, consumer interest and consumer protection call for this to be done sooner rather than later.