Blockchain Island by Content House

T O M O R R O W ’ S

W O R L D .

T O D A Y .

BLOCKCHAIN

¤8 (where sold)

F I N T EC H . ART I F I C IA L I N TE LLI GE N C E . E S P O RTS .

COVER STORY Understanding Libra – Facebook’s very own cryptocurrency

OFFICAL PARTNERS

FOCUS The latest on VFA agents and their impact on the blockchain sphere

ISLAND

COVER STORY The events that will shape the industry in the coming months

ESPORTS An analysis of Government’s plans for the future of esports in Malta

Winter 2019/2020

contents 33

Cover Story

Cover Story A CLOSE LOOK AT LIBRA As Facebook’s cryptocurrency, Libra, remains under the spotlight, Jo Caruana speaks to the experts to find out how it will impact the way we pay.

BRINGING THE BEST OF THE INDUSTRY TOGETHER From tech summits to conferences, and expert workshops to informal talks, Jo Caruana explores what’s happening in the coming months.

44 Focus

VFA AGENTS: NAVIGATING A NEW ROLE THROUGH UNCHARTED WATERS Helena Grech catches up with VFA experts to understand the role and future of accredited VFA agents within the local crypto and digital asset market.

Technology

Interview A WORLD FIRST: MDIA BEGINS PROCESSING AND CERTIFYING BLOCKCHAIN TECHNOLOGIES Mariella Camilleri catches up with MDIA CEO, Stephen McCarthy for the latest developments on its framework of regulations, certification and systems audits.

THE MFSA REGULATORY SANDBOX: TESTING INNOVATION IN A CONTROLLED ENVIRONMENT In this new age of technologicallyenhanced financial solutions, Malta is at the forefront of regularising them through the MFSA Regulatory Sandbox. Timothy Vella finds out more. REGISTERING ON THE BLOCKCHAIN: SHAKING UP MALTA’S PROPERTY SECTOR Helena Grech discusses blockchainbased registries with experts in the world of property and company registration.

Property

Education

BLOCKCHAIN AND EDUCATION: IS MALTA’S WORKFORCE PREPARED FOR THE INDUSTRY? How is Malta’s education system preparing for the industry? Will disruptive technology really affect education? Cassi Camilleri digs in.

Artificial Intelligence ENRICHING EDUCATION AND STIMULATING GROWTH THROUGH AI Rebecca Anastasi catches up with key people from MCAST’s Applied Research and Innovation Centre (ARIC) to discuss its recently-launched AI strategy.

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100

Business

EMBRACING THE FUTURE WITH CAR SHARING Jo Caruana chats with GoTo CEO, Liran Golan, the local company championing car sharing with its electric fleet of at-the-ready vehicles.

MAKING DIGITAL PROFITABLE More companies are seeking digital solutions for their business – but are they ready for them? Helena Grech speaks to Beat Consult’s David Galea to find out.

123 esports

VISION 2021: SECURING A PROSPEROUS FUTURE FOR MALTA IN ESPORTS AND VIDEO GAME DEVELOPMENT Timothy Vella speaks to industry insiders for the latest developments in the sector and the execution of Government’s Vision 2021. 19

EDITORIAL

The

driving force of change The world of disruptive technology is moving at a seemingly unprecedented pace – and nothing confirmed that more than Facebook’s move earlier this year, when it published a White Paper on the launch of its very own cryptocurrency, Libra, which, albeit controversial, is expected to be rolled out in the first half of 2020. As a social media platform of global reach and influence – the implications of this are enormous, and Blockchain Island attempts to gauge them in its cover story on page 22. Also moving forward at an incredibly fast pace is Malta’s national strategy for promoting and regulating innovative technology, ranging from blockchain to Virtual Financial Assets to Artificial Intelligence as well as esports and video game development. Championed by Government and backed by several stakeholders who see Malta’s enormous potential in this sector, the island is now firmly on the map of this tech-driven world, and this issue of Blockchain Island delves into the many sectors it’s leaving its mark on, from property to education and many more. The second edition of the DELTA summit is now around the corner, and Malta will be welcoming professionals from different areas of expertise and from all over the globe to our shores in October. Blockchain Island catches up with the Summit’s Executive Chairman, Abdalla Kablan, to find out what’s in store this year at DELTA, and sheds light on other significant events being held locally and internationally. The next few months will be an exciting time for the sector with more developments likely to emerge until the next edition of Blockchain Island – but until then, enjoy this issue.

Martina Said Editor

Publisher

Content House Group Mallia Building, 3, Level 2, Triq in-Negozju, Zone 3 Central Business District Birkirkara, CBD 3010 info@contenthouse.com.mt www.contenthouse.com.mt Editor Martina Said Director of Sales and Business Development Matthew Spiteri Senior Brand Sales Executive Jean Mark Meli Head of Accounts and Operations Marvic Cutajar Creative Director and Design Nicholas Cutajar Design James Debono Content House Ltd would like to thank all the protagonists, contributors, advertisers and the project team who have made this publication a success. Articles appearing in this publication do not necessarily reflect the views of Content House Ltd. All rights reserved. Reproduction in whole or in part without written permission of the publishers is strictly prohibited. Blockchain Island is distributed to all iGaming companies operating in Malta, to all blockchain companies setting up in Malta, as well as to relevant business and commercial stakeholders in Malta, including all law firms, banks, financial services companies and business consultancy firms, as well as to all local auditors, accountants and accountancy firms. It is also distributed to all Government ministries and departments, to leading hotels and cafés, as well as to the waiting areas of all private and public hospitals. Beyond the free distribution network, Blockchain Island is sold at all leading newsagents around Malta.

COVER STORY

A close look at

Libra

DESPITE FRANCE AND GERMANY AGREEING TO BLOCK IT AND GLOBAL CENTRAL BANKS PLANNING TO CONTEST IT, FACEBOOK’S CONTROVERSIAL, HIGHPROFILE CRYPTOCURRENCY LIBRA COULD WELL BECOME A REAL-WORLD REALITY. HERE JO CARUANA CHATS TO THE EXPERTS TO DISCOVER WHAT THIS COULD MEAN FOR THE FUTURE OF HOW WE PAY. emember the days when Facebook was just about poking people? 2006 (the indelible date I signed up to the ‘new Bebo’, as a friend put it) feels like a lifetime ago. Since then, we’ve seen the rise of business pages, information (over)sharing, social influencers, and even international scandals with the likes of Cambridge Analytica. Facebook’s upswing has been unprecedented; it is a global movement that now connects 2.41 billion active users.

And the company’s influence shows little sign of waning – especially since the unveiling of its cryptocurrency Libra, which will let users buy things or send money to people with nearly zero fees. Plans are already in place for people to pseudonymously buy or cash out their Libra online or even in local shops, and Facebook’s own Calibra wallet is set to be built into mobile applications like Whatsapp, Messenger and, of course, the social media platform itself. 22

COVER STORY

In the white paper that it issued on the topic, Facebook said Libra will ‘enable a simple global currency and financial infrastructure that empowers billions of people’ and it is expected to be rolled out in the first half of 2020. “The world truly needs a reliable digital currency and infrastructure that together can deliver on the promise of ‘the internet of money’,” Facebook says. But the rise so far hasn’t been without controversy. Just recently, both France and Germany agreed to block the cryptocurrency, citing concerns over sovereignty and persistent financial risks. Facebook was also quizzed by global regulators on the project, amid concerns over the threat the digital currency poses to financial stability. However, Facebook stressed that Libra won’t ‘threaten the sovereignty of Nations when it comes to money’. Conclusions on these ongoing discussions are yet to reached, yet there is no denying that cryptocurrencies are a reality that has to be faced, as other global giants, such as JP Morgan, are jumping on the bandwagon, with the latter also having developed its own cryptocurrency to settle transactions between clients in its massive wholesale payments business.

Libra begs the fundamental question: Which national currencies will be accepted and based on what weighting? Ian Gauci, Managing Partner, GTG Advocates, Afilexion Alliance and Caledo Group

Talking through what Libra is in more detail, Dr Ian Gauci, Managing Partner of GTG Advocates, Afilexion Alliance and Caledo Group, describes it as “the brainchild of Facebook”. “Facebook, together with a bunch of international corporate heavyweight conglomerates, the likes of Visa, Vodafone, Mastercard, PayPal, eBay and Uber, want to create an open-source digital currency, on blockchain,” he says.

COVER STORY fundamental questions: Which national currencies will be accepted and based on what weighting? How often will the weighting be reviewed? And how will one make sure there is no bias or political interference in the decision?” “These heavyweight conglomerates will form a centralised Libra Association endowed with political power that will make all the technical, software and managerial decisions. Presumably, at some stage when they decide to, this association might be further expanded as others join in.” Dr Gauci highlights the fact that Libra will only be created when someone buys it with a national currency. “The initial supply of Libra will go to the founding partners, who have all committed $10 million each,” he explains. “These founding partners will also be ‘validator nodes’.” “Conversely, Libra supplies will be destroyed (burned) when someone takes their Libra back to the Association to exchange the digital currency for some traditional national currency (reminiscent of the defunct US gold standard). To me, it begs other

These are all very valid queries – and Dr Gauci isn’t the only one calling the system into question. After all, while, to many, it may be all well and good for Facebook to cause disruption of this kind in the financial world, the wider system does need to be taken into consideration. Take the Eurosystem Central Banks, for instance, what will their stance on crypto be and how it could change things? Jesmond Gatt, Chief Officer Banking Operations at the Central Bank

Regulators note the risk of concentrating so much responsibility across a small number of private actors who may not necessarily have public interest priorities. Jesmond Gatt, Chief Officer Banking Operations, Central Bank of Malta

is categorical about this: “The Central Bank of Malta, as part of the Eurosystem, follows the European Central Bank’s view, namely that cryptocurrencies do not qualify as currencies from a Union perspective. In accordance with the EU Treaties and the provisions of Council Regulation (EC) No 974/98, the euro is the single currency of the Union’s economic and monetary union. Cryptocurrencies are not legal currencies or money. As they are not fiat currencies, it would be more accurate to regard them as an asset rather than as a means of payment.”

COVER STORY

Unless the regulatory treatment of Libra is clarified, I cannot envisage that it will be adopted by local banks. Karol Gabarretta, Secretary General, Malta Bankers’ Association

Nevertheless, given the evolving digital economy, the Central Bank does see potential in digitalising currencies, particularly in the eventual issuance of a central bank digital currency. “However, providers of exchange services between virtual currencies and fiat currencies and custodian wallet providers need to be licensed or registered and regulated,” Mr Gatt continues. “Cryptocurrencies represent risks in terms of consumer protection and confidence, cyberattacks, money laundering and terrorist financing.” “Society’s expectations for a currency or money are based on three broad concurrent properties: as a universal means of payment, as store of value, and as a unit of payment,” he explains. “These properties underpin the viability of a currency to enable society to interact within a sound economic, social and financial ecosystem. All this relies on a number of actors required to maintain the necessary order.” “Contrary to fiat currency, cryptocurrencies offer no guarantee of security, convertibility or value,” Mr Gatt adds. “Many propositions currently considered as cryptocurrencies have fundamental assurances that are either missing or

inherently weak, untested, unstable and exposed to risks that are yet to be assessed.” Regulators are developing the required regulatory regimes which should – going forward – address specific aspects. “Regulators note the risk of concentrating so much responsibility across a small number of private actors who may not necessarily have public interest priorities,” Mr Gatt warns. Going into more detail about how local banks are reacting to crypto – and Libra specifically – Karol Gabarretta, Secretary General of the Malta Bankers’ Association, says that reactions have been muted so far. “I believe this is the result of several factors,” he says, explaining that the Association’s main role was, and continues to be, that of a coordinating, advocacy and lobbying body on sectorial issues and policies for banks operating in Malta.”

COVER STORY

“These include the significant risk-averse approach taken by local banks with regards to this new asset class, the high volatility exhibited by most cryptocurrencies over the past year or so, the (justifiable) stance demonstrated by regulatory authorities to date regarding the use of cryptocurrencies by banks, and the European Banking Authority’s (EBA) recommendation earlier this year that the European Commission carries out further analysis to determine the appropriate EU-level response.” “Furthermore, in July 2014 and August 2016, the EBA had issued two opinions on virtual currencies which inter alia recommended that supervisory authorities ‘discourage’ credit institutions, payment institutions and electronic money institutions from buying, holding or selling virtual currencies, and recommended bringing certain virtual currency actors into the scope of the AML Directive.” As for Libra specifically, Mr Gabarretta doesn’t think that the situation has sufficiently evolved in an objective way so as to provide concrete indications on how this will pan out in the future. “I believe that it is too early, at this stage, to come up with expectations as to how Libra will affect (if indeed it will) the traditional banking sector,” he says. “However, unless the regulatory treatment of Libra is clarified, I cannot envisage that it will be adopted by local banks, particularly in view of the EBA’s stance on virtual currencies.” Turning our attention to the wider crypto sphere and its future, the experts share their thoughts on what to expect from it here in Malta. “While it may be hasty to totally discount the future

use of crypto and Libra by local banks – particularly if in time there is certainty from the regulatory perspective regarding the applicable treatment – various factors in play would seem to discourage any early adoption of such virtual assets by local banks,” Mr Gabarretta says. “It should also be realised that, in the case of certain sectors which are new and untapped – and which are not yet subject to appropriate regulatory oversight and requirements – it is to be expected that banks, which should always act in the interests of their depositors, adopt a prudent approach to such assets. In fact, to use an analogy on this point, while the IMF has welcomed Malta’s establishment of a legal framework for virtual financial assets, it stated that the high risk of such assets warrants cautious implementation, and putting into practice the relevant laws and regulations should be undertaken gradually.” On behalf of the Central Bank, Mr Gatt believes that the future blockchain technology on which the circulation of certain cryptocurrencies is based, should offer numerous potential uses to both financial and non-financial corporations. “This technology, among others, contributes to the welcome dissemination of innovation in the financial sphere,” he explains. “Owing to this, blockchain as a technology offers a number of prospects which are being explored by many stakeholders in the financial world, as it can be used for the digital representation of many assets. With this in mind, central banks in future may opt to adopt it for the digital representation of their own fiat currency, or as underlying technology for payment and settlement systems,” he concludes.

Photo by Albert Camilleri

COVER STORY

Bringing the

best of the industry together

OCTOBER IS A BUSY MONTH FOR THE TECH WORLD, BOTH ON THE NATIONAL AND GLOBAL STAGES. FROM SUMMITS TO CONFERENCES, AND EXPERT WORKSHOPS TO INFORMAL TALKS FOR BEGINNERS, JO CARUANA EXPLORES WHATâ&#x20AC;&#x2122;S TO COME. 33

COVER STORY

Photo by Christian Sant Fournier

DELTA Summit

2-4 October Malta Fairs and Conventions Centre, Ta’ Qali Malta’s tech scene is synonymous with the national DELTA summit, which is Malta’s official digital innovation event, bringing some of the world’s top thought leaders, innovators and pioneers to the island to share their ideas and insights about these ever-emerging industries. “This year, we’ve expanded the event beyond just blockchain,” explains entrepreneur and FinTech expert Dr Abdalla Kablan, who is also the Executive Chairman of DELTA Summit and one of its keynote speakers. “It is still one of our main pillars, but we are also moving into Artificial Intelligence, the Internet of Things, Gamedev and esports.” Last year, it can be argued that DELTA solidified Malta’s position as the Blockchain Island and, this year, plans are in place to go beyond that and to create a digital innovation movement from the island. “2018 saw the launch of Malta’s Digital Innovation Authority (MDIA) at the summit,” Dr Kablan continues. “It became the first authority in the world

This year, the national AI Strategy will be launched, making it the official platform to showcase Malta’s initiatives in the digital innovation sphere and to highlight our achievements in the technology world. Abdalla Kablan,

Executive Chairman, DELTA Summit

to regulate technology arrangements and services. This year, as a follow-up, the national AI Strategy will be launched, making it the official platform to showcase Malta’s initiatives in the digital innovation sphere and to highlight our achievements in the technology world.”

COVER STORY

The summit’s list of speakers is also impressive. Attendees can expect to hear from the founder of Binance, CZ, the founder of Wikipedia, Larry Sanger, and the co-founder of Apple, Steve Wozniak, who will be sending in a video message. This will all form part of Malta Tech Week, crafted in collaboration with DELTA’s partners OKEx, which will take the form of a week of networking, events, business breakfasts and other activities. “We will bring people around tables to shape the tech space for years to come,” Dr Kablan says. “I am very much looking forward to another successful event. We are doubling our numbers but making sure we’re not compromising on quality. We promise that this year is going to be bigger and better, and are proud to be positioning the DELTA Summit as the crown jewel of tech events in the region.” Visit Delta-summit.com

Blockchain and AI: Where are they taking us? 10-11 October Villa Bologna, Attard

Following a series of popular past events, Working Town presents its latest conference: Blockchain and AI: Where are they taking us? Designed to target both those with an indepth knowledge of the market and relative newbies, it will feature a number of expert speakers who will discuss the impact these innovative technologies are having (and may yet have) on the world. While debating the various current and future applications of blockchain and AI, the conference will also look at the relevant legal frameworks needed by the sector, particularly regarding Malta.

Blockchain and AI are set to change our lives – but what do we know about these technologies and what can we expect their impact to be? Mark Azzopardi, Working Town Events

COVER STORY

“We are delighted to be hosting the Blockchain and AI: Where are they taking us? conference,” says Mark Azzopardi from Working Town Events. “Blockchain and AI are set to change our lives – but what do we know about these technologies and what can we expect their impact to be? Have they already had a profound and irreversible effect? We trust that this useful and enjoyable conference will answer these questions and more, for those looking to deliver services related to these sectors as well as those who just wish to learn the basics.”

The two-day event will include talks, forums and panel discussions with experts including Helen Burrows, Aviya Arika, Soulla Louca, Godfrey Baldacchino, Joseph Anthony Debono, Claudia Borg, Gordon Pace, Stephanie Fabri, Vanessa Camilleri, David Galea, Philip Maurice Mifsud, Luis Pallares, Abigail Mamo, Béatrice Collet, Denise De Gaetano, Helga Pizzuto, Mark Mallia, Darren Parkin, François Grech, Leonard Bonello, Malcolm Falzon, Ian Gauci and James Muscat Azzopardi. “It will put you in contact with active practitioners in the areas of blockchain and AI, who will help you understand where the technologies stand today, their various applications both current and future, and the relevant legal frameworks that apply, particularly in Malta,” Mr Azzopardi continues. “We are excited to showcase all the ways that blockchain could impact the world beyond crypto, including in CSR.” Visit www.workingtown.com/events

World AI Summit 9-10 October Taets Park, The Netherlands This global summit was designed to tackle the most burning AI issues out there head-on, and to set the global AI agenda. This year, Malta will have quite a presence. Members from the Malta Digital Innovation Authority (MDIA) will be attending, while Silvio Schembri, Parliamentary Secretary for Financial Services, Digital Economy and Innovation, will be addressing participants, alongside industry hard-hitters such as Amazon VP, Dr Werner Vogels, Uber Chief Scientist, Raquel Urtasun, and Google’s Chief Decision Scientist, Cassie Kozyrkov.

COVER STORY

“As with everything, education is key,” says CEO of the MDIA Stephen McCarthy, who explains that the Authority is also involved in the DELTA Summit. “Blockchain, AI, quantum computing and the Internet of Things are still mystifying and bewildering to many. And, while this is somewhat understandable given that the notions driving these technologies forward are novel and a little otherworldly, with the right ingenuity and creativity, we can bridge the gap. This is precisely the mission that the MDIA will embark on at these two major events, as well as in our campaigns to the wider public.” Mr McCarthy stresses that global conferences like DELTA and the World AI Summit are important, as they not only bring the tech community together to exchange ideas, but also take those ideas closer to the people. “Malta is a leader in the field, so our presence could not be amiss,” he continues. “At these summits we will showcase the depth of our regulatory development in these areas, and highlight that Malta is the first ready-and-able jurisdiction to certify and regulate these emerging technologies.”

“Throughout these summits, we will also present the world’s first national AI certification programme to the industry. The certification process will largely be based on Malta’s Ethical AI Framework, and aims to provide applicants with valuable recognition in the marketplace that their AI systems have been developed in an ethically aligned, transparent and socially responsible manner.” To book, visit Worldsummit.ai

Throughout these summits, we will also present the world’s first national AI certification programme to the industry. Stephen McCarthy, CEO, Malta Digital Innovation Authority

COVER STORY

MORE EVENTS

Photo by Albert Camilleri

LOOKING FOR MORE? WE’VE CAST OUR EYES OVER THE REST OF THE BEST TECH AND BLOCKCHAIN EVENTS TAKING PLACE IN THE MONTHS TO COME, LOCALLY AND IN EUROPE. DIFFUSION 2019 Date: 19-20 October Location: Factory Berlin, Berlin, Germany Expect two days of exciting Web 3 protocols in blockchain, AI, IoT and Big Data from across the Convergence Stack – made up of hacks, exclusive product launches and live demos. Leading practitioners from cryptography, machine learning, smart contract dev, IoT, systems engineers and crypto-economics will explore the implications of deploying new technologies and distributed systems in complex and challenging fields, such as smart cities, Industry 4.0, Mobility and more. Diffusion2019.devpost.com DECENTRALIZED 2019 Date: 30 October-1 November Location: Divani Caravel Hotel, Athens, Greece Decentralized has established itself as one of Europe’s premier conferences on blockchain and digital currencies. This year’s event will bring together the world’s leading business executives and academic experts to debate current trends and future developments across three conference tracks: business, technology and academia. Keynote speakers include Dr Adam Back, Dr W Scott

Scornetta, Bill Barhydt, Perianne Boring, Tim Draper, Silvio Schembri, Eva Kaili, Anthony Lewis, Marta Piekarska, Tone Vays and Ramesh Ramadoss. Decentralized.com MALTA AI AND BLOCKCHAIN SUMMIT 2019 Date: 7-8 November Location: InterContinental Malta, St Julian’s, Malta More than 14,000 exhibitors, investors, suppliers and thought leaders have come together, forged new partnerships and sealed lucrative business deals at this event in the past, and now it’s back. Speakers will include Prime Minister Joseph Muscat, Akon, Bobby Lee, Tim Draper and Tone Vays. Maltablockchainsummit.com BLOCKCHAIN TECHNOLOGY CONFERENCE Date: 11-13 November Location: Hotel Nhow, Berlin, Germany This event is dedicated to creating the future of business with blockchain technology. It will include two full-day power workshops, with live coding and the direct application of new ideas. Speakers will also provide deep insights into a world augmented by distributed ledger technology, and sessions will

feature workshops on principles, programming techniques and real-world applications. Blockchainconf.net BLOCKCHAIN FOR BEGINNERS Date: 14 November Location: Palazzo de la Salle, Valletta, Malta Returning for its second edition, this fun evening event is designed to introduce blockchain to absolute beginners. Local and international speakers will provide insight ahead of a lively Q&A session, followed by a networking reception. It is the ideal start for anyone keen to dip their toes into the sector. petragd@guisthall.com FINTECH WORLD FORUM 2019 Date: 18-19 November Location: Kensington Conference and Events Centre, London, UK This is where to head for serious FinTech insight. There will be a vast programme of talks on topics including regulatory challenges to the market, tokenisation and stablecoins, investing for millennials, how blockchain and DLT can improve and disrupt the banking and insurance sectors, and how to build trust in financial services. Fintechconferences.com

FOCUS

VFA Agents:

Navigating

a new role

through

uncharted waters

NOW THAT – SINCE APRIL THIS YEAR – THE FIRST VIRTUAL FINANCIAL ASSET AGENTS HAVE BEEN ACCREDITED, IT BEGS THE QUESTION: WHAT’S NEXT IN THE LOCAL CRYPTOCURRENCY AND DIGITAL ASSET MARKET? HELENA GRECH CATCHES UP WITH INSIDERS IN THE SPACE TO BETTER UNDERSTAND THE ROLE AND ITS IMPLICATIONS IN REAL TERMS.

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ast April saw the muchanticipated licensing of Malta’s first Virtual Financial Asset (VFA) agents, paving the way for companies seeking to issue virtual tokens through Initial Coin Offerings (ICOs) or to act as service providers, to apply for licensing with the Malta Financial Services Authority (MFSA).

According to the MFSA, as at August 2019, a total of 17 VFA agents are accredited locally, which should serve to reinvigorate companies based in Malta seeking to make use of virtual assets as part of their business model. Indeed, VFA agents assume the role of gatekeepers with the aim of preventing persons who are not fit and proper from gaining access to the financial system. Under local legislation, a VFA is defined as “any form of digital medium recordation that is used as a digital medium of exchange, unit of account or store of value and that is not (a) electronic money, (b) a financial instrument, or (c) virtual token”, while a Virtual Token (VT) is defined as “a form of digital medium recordation that has no utility, value or application outside of the DLT platform on which it was issued and may only be redeemed for funds on such platform directly by the issuer of such DLT asset, provided that electronic money shall be excluded from this definition.” Following the licensing of VFA agents, Blockchain Island reached out to an accredited agent, a legal firm working in the sphere and the MFSA itself to gain a deeper understanding of what the role really entails, and what to expect in the future.

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Josef Mercieca, a partner at BDO Malta which has achieved accreditation as both a VFA agent and a Systems Auditor, explains “as a VFA agent, our role is ensuring clients’ preparedness prior to seeking MFSA approval and guiding our clients on all matters relating to their responsibilities and obligations to ensure compliance with the VFA framework, whilst taking advantage of one of the most advanced crypto regulatory regimes.” He adds that since the start of the transitory period, that is the period between the day the VFA Act came into force in November 2018 and the day VFA agents first became accredited in April this year, “BDO Fintech – the entity within BDO licensed to carry out VFA agent duties – has been assisting both token issuers and VFA service providers intending to establish their crypto business in Malta.” The company also works closely with colleagues in technology assurance on the Malta Digital Innovation Authority (MDIA)

The island has grown from a strong and reputable financial services jurisdiction to a prime hub for the FinTech industry. Josef Mercieca, Partner, BDO Malta

System Audit process. BDO is the only firm to be licensed both as agents as well as to perform Systems Audits by the MDIA. Systems Audits are mandatory for issuers and service providers applying for a licence under the VFA Act. Additionally, it’s possible for entities utilising Innovative Technology Arrangements (ITAs) in their business model to apply for a voluntary certification under the MDIA’s certification process and guidelines. Mr Mercieca sheds light on the requirements for the role of VFA agents, explaining that it necessitates “the dedication of important human and technological resources, since we are the first main point of contact with the MFSA.” Describing such agents as gatekeepers, Mr Mercieca stresses that it is the company’s responsibility, as registered agents “to protect public interest and market integrity. Therefore, when choosing to represent a client, we must ensure that the client is a fit and proper person, and its business is run decently.” Indeed, the aim of regulating VFAs, and more so the introduction of VFA agents, is to regulate an unregulated world and to provide investors with peace of mind that the ICO they are buying into, or the service provider they are engaging with, is genuine. 46

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In view of Malta’s economy relying heavily on the financial services industry, Mr Mercieca notes that “the island has grown from a strong and reputable financial services jurisdiction to a prime hub for the FinTech industry.” He believes that the interest from foreign investors will continue to grow, and that “it is rewarding to be in pole position in an innovative market and be among the first to hear of disruptive ideas, particularly within the financial services industry.” Turning to the greatest challenges of being a VFA agent, Mr Mercieca explains “since Malta is at the forefront in regulating blockchain and cryptocurrency ventures, traditional but important service providers, such as the banking sector, are yet to catch up with the VFA service providers’ needs, thereby presenting an operational challenge for our clients.” However, “despite the challenges for the industry, we believe that blockchain technology creates opportunities which will lead to a more efficient, organised and secure business environment.” The process of becoming an accredited agent, which includes a written assessment, is a complex one, and Mr Mercieca says it “was the result of several months of hard work by BDO Fintech’s team, who were fully dedicated to achieving this milestone.” Addressing reports about the low pass rate following the first round of VFA agent exams – which Times of Malta reported was 39 per cent last year – as well as complaints from crypto companies about the length of time it had taken for agents to be licensed, an MFSA spokesperson explains that the process is a rigorous one.

“Each applicant undergoes a rigorous assessment process prior to authorisation, including fitness and properness checks on proposed key personnel. The MFSA assesses fitness and properness against four criteria, namely: competence; reputation; conflicts of interest and independence of mind; and time commitment. The competence assessment is therefore one of four criteria which the Authority takes into consideration when assessing fitness and properness,” the spokesperson asserts. As for the length of time taken to license agents, the MFSA spokesperson says, “the VFA Act came into force on 1st November 2018; six months later, on 2nd April 2019, the MFSA granted the first in principle approvals to 14 VFA agents. In this light, a six-month period is considered a normal timeframe for the issuing of 14 in-principle authorisations. The decision was taken to issue in-principle approvals in batches so as to eliminate any competitive disadvantages in the field.”

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The MFSA was tasked with formulating a written assessment for the licensing process of agents, which presented the Authority with a challenge without past assessments and experiences to fall back on. The spokesperson explains that a written assessment was included in the process “to address an expectations gap which subsisted at the time.” Shedding further light on the content of the exam, the Authority adds, “it seeks to examine whether persons are competent for their proposed role as a VFA agent. The questions cover the frameworks in which proposed VFA agents should be competent, namely the traditional financial services, VFA and AML/CFT frameworks.” Jade Fenech, Legal Associate at E&S Law, the legal arm of E&S Group, which provides legal services to, among others, companies operating in the cryptocurrency space, describes the VFA agent’s varying roles.

The fact that Malta provides a concrete legal framework, including a specific test to determine the token’s nature, is attracting a good number of companies to have their project and token analysed under Malta law. Jade Fenech, Legal Associate, E&S Law

“In so far as VFA service providers are concerned, the role of the VFA agent is to guide and assist the applicant throughout the licensing process and assist the applicant in the preparation and submission of the VFA licence application. In this case, the role of the VFA agent ends upon the submission of such application,” she says. As for issuers, she adds “the VFA agent has more of an ongoing relationship. VFA issuers are required to have a VFA agent appointed at all times. Initially, the VFA agent assists the issuer with the submission and registration of a compliant whitepaper with the MFSA, as well as guide the issuer to comply with the VFA regulatory framework.” Further to this, Dr Fenech adds, “following the submission of the whitepaper, VFA agents then take on a monitoring role, advising and guiding the issuer in relation to its ongoing obligations and responsibilities under the VFA Act. On an annual basis, the VFA agent must also submit a Certificate of Compliance to the MFSA on behalf of the issuer, confirming that all the obligations under the VFA Act are being adhered to, or else listing any breaches of any such obligations.”

FOCUS

In view of the role being relatively new, in an industry which is ever-changing, Dr Fenech remarks that it “can only develop further to maximise the efficiency and effective implementation of the VFA framework. The VFA agent acts as a filter and line of communication between the MFSA and issuers and service providers. The fact that the VFA agent takes on tasks which are usually carried out by the MFSA in traditional industries means that the MFSA should have more time on its hands to focus on the reviewing of applications and whitepapers, and the further development of the regulatory framework. Moreover, the hand-holding role of the VFA agent as an expert in the industry, vis-à-vis issuers and service providers, should ensure that the VFA framework is implemented effectively.” The challenge for many agents today is that the nature of the role calls for expertise at a time when the industry’s professionals are trying to garner experience to draw upon, “which can only be gained over time,” adds Dr Fenech. Asked how she expects the role to develop, Dr Fenech says this “will greatly depend on the needs of the MFSA in response to the way the industry moves. The role will eventually develop in the direction that the MFSA requires to ensure the effective implementation of the framework in a fast-changing industry. On the other hand, one may also foresee the possibility of the role of the VFA agent being split into different roles to allow the VFA agent to focus more on specific aspects.”

Does Dr Fenech think the licensing of agents will reinvigorate Malta’s crypto market? “The implementation of the VFA framework has resulted in a slow-down of crypto companies launching their business through Malta when compared to the influx experienced in 2017 and 2018. The reason for this is because the process is quite onerous, which may be a deterrent for certain start-ups and businesses. However, serious projects and businesses still appreciate the importance of comprehensive regulations and seek to be regulated under one of the very few sector-specific regulatory frameworks, which is ultimately paving the way for other jurisdictions to follow suit.” In her experience, despite a “decline in the number of companies launching their projects from Malta, there has been an increase in companies requesting an analysis of their whitepaper and a determination of the nature of their token under the VFA regulatory framework, including a Financial Instrument Test (FIT). “The fact that Malta provides a concrete legal framework, including a specific test to determine the token’s nature, is attracting a good number of companies to have their project and token analysed under Malta law,” she concludes.

The MFSA assesses fitness and properness against four criteria, namely: competence; reputation; conflicts of interest and independence of mind; and time commitment. MFSA Spokesperson

INTERVIEW

A world first MDIA begins processing and certifying blockchain technologies

AS THE MALTA DIGITAL INNOVATION AUTHORITY PROGRESSES WITH ITS FRAMEWORK OF REGULATIONS AND SYSTEM AUDITS, MARIELLA CAMILLERI MEETS CEO STEPHEN MCCARTHY TO DISCOVER WHAT LIES AHEAD.

INTERVIEW

aving taken giant leaps into the technological world, Malta’s need for security systems aimed at protecting users of the same technology has become more pronounced, and this previously uncharted territory is now a minefield for the Malta Digital Innovation Authority (MDIA), which was set up to support innovative technology and build a regulatory framework for its users by giving assurance through certification.

While currently the focus is on blockchain technology, with Artificial Intelligence expected to be next in line, Mr McCarthy says the MDIA’s ambitions are much wider. “This is why we have ensured that our framework will be applicable to a broader spectrum of disruptive and innovative technology arrangements (ITAs), such as quantum computing and the Internet of Things.”

From systems audits to ITAs, technical administrators and resident agent guidelines, MDIA has ensured that the right structure is in place to meet market demands and to ensure critical protection for end users.

However, establishing a safe and secure environment for businesses and users was the first crucial step for the Authority, which, from its earliest days, worked on having the right structures in place to comply with a growing market. This included producing guidelines to develop a robust regulatory system where innovation can thrive. “From systems audits to ITAs, technical administrators and resident agent guidelines, MDIA has ensured that the right structure is in place to meet market demands and to ensure critical protection for end users.” “However, issuing laws, guidelines and directives is not enough unless the same are duly policed and upheld,” Mr McCarthy adds. “MDIA has taken great care in employing few of the best in the field, and today has officers who are well-versed in and knowledgeable about the technologies themselves and the most current innovations thereto. The Authority has also adopted a rigorous process to appoint Systems Auditors who are vital in ensuring conformity of the ITAs with the law and regulatory demands.” So, what are the newly-enhanced systems audit guidelines and what do they offer? “The Authority has developed a single approach to technology due diligence, which is what systems audits are. The requirements on any ITA are the same

irrespective of its nature, scope or size,” he asserts. “It is within this context that the need for an enhanced technological due diligence was identified since there are ITAs that, of their very nature, are deemed to be safety-critical, meaning that they are capable of having an impact on human life and well-being, or ITAs that can be so disruptive and impacting in the market they operate in that the relevant Lead Authority may deem such enhanced due diligence to be necessary.” When asked about the resident agent’s role within the Authority, Mr McCarthy explains that MDIA deals with a borderless technology that doesn’t exist physically in a jurisdiction, but everywhere and anywhere in cyber space. “This is why MDIA deemed it crucial to have an agent who is registered and physically present in Malta, with whom the Authority corresponds. The resident agent gives actual presence to the technology in the jurisdiction of Malta, which in effect makes that technology Maltese.” 55

INTERVIEW

Innovative technology such as blockchain and its potential are today acknowledged at the highest international levels, however, caution is still necessary – and Malta, together with other jurisdictions, is aiming to give confidence to even the most cautious approaches used in the field. “Locally, by developing a framework which goes beyond regulating the financial aspect, as is the case with most other jurisdictions, we can see the bigger picture. Also, by certifying the technology, we can see how this works and thus gain insight into all that is happening. This is a first and unique to our jurisdiction.” Complementing this framework is Mapping Tomorrow, Malta’s new public administration strategy which promotes the use of innovative technology such as blockchain and AI for Government’s initiatives. “These include the use of blockchain technology in the housing markets in order to make rental agreements inviolable, and also by the Registry of Companies, making it the first agency in the world to run on a blockchain-based system.” On a European level, the European Blockchain Partnership was created with the goal of developing a Europe-wide blockchain service infrastructure. “Concurrently, Malta is also participating in the development of an international standard for blockchain (ISO/TC 307) together with other jurisdictions.” Looking ahead, the MDIA will be present at and participating in the upcoming DELTA Summit, with the aim of reaching out to a wider network of industry stakeholders and present itself once again as a support network for innovators who are interested in local 56

investment. “Over the past two years, we have sat quietly but not idly, and have worked on ensuring the best standards and practices within the field of innovative technologies. The 2019 DELTA summit is an opportune occasion for us to showcase our journey so far and what our next steps will be.” As for its expansion in the field of Artificial Intelligence, MDIA is currently extending the present certification framework to include AI, “making Malta first in being able to certify AI. This process essentially involves ensuring that the framework is well adapted to what AI technology has to offer. Other local initiatives include the setting up of the Malta.ai Taskforce, and identifying its strategic pillars as Investment, Start-ups and Innovation. Also, with the public consultation on Malta’s National AI Strategy coming to a close, the articulation of such a strategy will be concluded and will include the AI Ethical Framework for Trustworthy AI.”

5 September 2017 Launch of the National Blockchain Taskforce

23 April 2018 Enactment of the Acts in Parliament

4 June 2018 MDIA was established, led by CEO Stephen McCarthy

18 June to 10 October 2018 1 November 2018 MDIA started accepting applications for ITAs and Systems Auditors. On the same day the AI Taskforce was formed.

All necessary guidelines were published

21 March 2019 AI Policy published for consultation

3 April 2019 First Systems Auditor approved making MDIA ready and able to start the certification process

Looking Ahead With already 4 Systems Auditors approved and more in the pipeline, and the AI strategy set to be published -- MDIA is looking forward to start processing its first certifications making Malta an absolute first in the field.

TECHNOLOGY

Disruptive technology

and the value of certification WITH THE NEW SYSTEM OF CERTIFICATION FOR INNOVATIVE TECHNOLOGY ARRANGEMENTS (ITAS) IN PLACE, MARIELLA CAMILLERI SPEAKS TO MALTA DIGITAL INFORMATION AUTHORITY CHIEF TECHNOLOGY OFFICER WAYNE GRIXTI AND CHIEF REGULATORY OFFICER TREVOR SAMMUT TO DISCOVER WHAT THE PROCESS ENTAILS.

TA and AI certification is a systematic process involving experts who ensure that such technologies truly merit documentation. The process aims to strike a balance between the freedom of technological innovation and the assurance needed to protect users against future cyberattacks.

What is the role of the technical administrator and why was it required? Blockchain technology’s beauty is its decentralisation and openness, giving the users of that chain control and power to verify all the information it contains – a system that needs no central authority capable of manipulating the system. Due to decentralisation, all nodes on the chain are needed to verify a new block, making the system completely transparent and impenetrable. However, incidences of stolen cryptocurrency and attempted attacks on blockchains are likely to become more frequent. This led Malta to safeguard against technology corruption, whereby systems seeking certification will undergo a rigorous process ensuring their function is accurate and within the legal parameters.

Trevor Sammut

Although this might go against blockchain’s philosophy, the Authority aims to ensure safety to end users. This balance allows disruptive technology to reach its embedded potential, while also ensuring system credibility which is essential for any market function. Hence, the role of the technical administrator is to ensure that such innovative technology falls within the guiding principles. 59

TECHNOLOGY

What kinds of interventions on technology does the role prescribe? The Authority acts according to the type of ITA design and blueprints presented, however, such interventions are limited and only arise in the event of material loss or when the law is violated. Interventions are logged, audited and notified, but there are instances when intervention is relinquished due to technical infeasibility. In such cases, certification is issued for a limited time, or public records will show insufficient ITA intervention, thus informing all end users. This is a pre-requisite for all technology certification. A Forensic Node in the blueprint needs to be documented on all ITAs presented to the Authority. Essentially this prevents omissions and corruption on all data and events on the chain. MDIA has just published guidelines on this node, providing guidance on how information must be written to ensure tamper-proof access that guarantees authenticity. What is the role of the Systems Auditor? The Systems Auditorâ&#x20AC;&#x2122;s role is to assure that technology in line for certification approval lives up to its promise. Verification

and certification are part of a process that ensures technological integrity and provides protection for end users. Verdicts for ITA approvals are based upon the opinion of Systems Auditors and subject matter experts to MDIA. What are the criteria for Systems Auditor applicants and what do they need to possess to gain MDIA approval? High-level qualifications in ICT and IT Audits, and vast experience in auditing are key requirements. Prospective candidates must also undergo a rigorous MDIA interview to assess their knowledge of the subject. Systems Auditors must also be well read on versatile technology as this ensures their capability of verifying the function of an ITAâ&#x20AC;&#x2122;s blueprint. How many Systems Auditors have been approved by the MDIA to date? To date, four Systems Auditors are listed and approved by the MDIA, however, applications are still being received. At present, more candidates are being interviewed and the Authority is set to expand its team by the end of 2019.

Wayne Grixti

TECHNOLOGY

Panellists during the Regulatory Sandbox Pillar 1 workshop held in July, discussing the benefits of sandbox participation.

The MFSA Regulatory Sandbox: Testing innovation in a controlled environment AS TECHNOLOGY DEVELOPS OVER TIME, SO TOO MUST OUR RULES AND REGULATIONS DEVELOP TO REFLECT THESE CHANGES. AS A NEW AGE OF TECHNOLOGICALLY-ENHANCED FINANCIAL SOLUTIONS IS USHERED IN, MALTA IS AT THE FOREFRONT OF REGULARISING THEM THROUGH A NEW CONCEPT – THE MFSA REGULATORY SANDBOX. TIMOTHY VELLA SPEAKS TO THE MALTA FINANCIAL SERVICES AUTHORITY TO FIND OUT WHAT IT’S ALL ABOUT. 62

TECHNOLOGY

ollowing the publication of the Consultation Document on Regulations, known as Pillar 1, and presented under the FinTech Strategy by the Malta Financial Services Authority (MFSA) last July, more than 120 delegates attended a consultation session held by FinanceMalta, aimed at engaging with stakeholders to encourage FinTech innovation.

Attendees and panellists discussed the benefits of sandbox participation, and put forward questions regarding the organisation, operation and practices of the Regulatory Sandbox, which the MFSA’s Chief Officer of Strategy, Policy and Innovation, Dr Christopher P. Buttigieg, considers to be a fundamental step to establishing Malta as a global FinTech hub. But what is the Regulatory Sandbox, and what does it mean for Malta? Blockchain Island digs in. WHAT IS IT? The Regulatory Sandbox is a testing ground for FinTech operators to analyse and evaluate their innovations for a select period of time within a controlled environment. WHY DO WE NEED IT? Existing regulatory frameworks may not fully cater for technology-enabled financial innovation. MFSA’s new approach supports and facilitates innovation whilst safeguarding consumer protection, market integrity and financial soundness.

MFSA’s new approach supports and facilitates innovation whilst safeguarding consumer protection, market integrity and financial soundness.

WHAT’S NEW ABOUT IT? The MFSA is seeking to foster sustainable technological innovation by building on a wealth of existing technical knowledge, and consulting and coordinating with many different players in the technological sector, while providing a base of legal certainty. WHAT ARE THE PRINCIPLES OF THE REGULATORY SANDBOX? The MFSA FinTech Strategy identifies the following principles of the Regulatory Sandbox: • Leading in the development of this emerging sector through actions and initiatives centred on driving innovation; • Facilitating innovation through the implementation of strategic objectives outlined in the FinTech Strategy; • Collaborating with various stakeholders, international regulators and market participants to develop the FinTech sector while nurturing trust and dialogue among parties; • Embracing innovation by adopting Regulatory Technology (RegTech) and Supervisory Technology (SupTech) solutions, and developing the capacity to understand and be proactive towards addressing regulatory challenges brought about by such innovations; • Educating consumers and the industry as a whole on the benefits and risks of FinTech and related technologies; • Strengthening confidence in the market and its institutions, thereby fostering a robust and dynamic FinTech sector in Malta.

TECHNOLOGY

WHAT DOES THIS MEAN FOR MALTA ON THE INTERNATIONAL STAGE? Malta already offers a business environment conducive to innovation, especially within the crypto-asset space, and testament to this is the implementation of the unique and original Virtual Financial Assets (VFA) framework. Along with the development of the Maltese FinTech Ecosystem, the Regulatory Sandbox will further support financial innovation and attract international entities to test their solutions, further improving Maltaâ&#x20AC;&#x2122;s reputation as one of the leading, technology-friendly jurisdictions. WHAT BENEFITS AND ADVANTAGES CAN START-UPS AND BUSINESSES EXPECT? Through the adoption of a proportionate framework, start-ups and businesses can provide and test their technologically-enabled financial innovations within a controlled environment, which could potentially give rise to either new or reengineered business models, applications, processes or products. HOW DOES THE MFSA PLAN ON ADDRESSING AND REDUCING RISKS? Despite the improvements to traditional financial services, technology-enabled financial innovation brings about its own specific challenges and risks, especially relating to IT. The Sandbox provides a controlled and contained environment within which these risks may be observed closely for a specific period of time. The close dialogue between all stakeholders will also facilitate the emergence of regulatory and supervisory solutions which will address any potential gaps in existing financial services legislation.

Along with the development of the Maltese FinTech Ecosystem, the Regulatory Sandbox will further support financial innovation and attract international entities to test their solutions.

Pierre Bonnici, MFSA, moderating a panel of legal experts and entrepreneurs during a recent workshop organised with FinanceMalta.

HOW IS THE SANDBOX STRUCTURED? Prior to being granted permission to participate in the Sandbox, parties must undergo a selection process during which they will be required to demonstrate how their proposals satisfy eligibility criteria. By doing so, only entities with proposals that truly merit the use of the Sandbox will be confirmed as participants. Once confirmed, they will be able to provide and test their technologically-enabled financial innovations in the sandbox. The proposed Sandbox shall take the form of a bi-annual cohort structure, during which a group of FinTech operators will be accepted and selected to test their solutions in the Sandbox simultaneously for a period of six months. Additionally, special purpose cohorts would cater for specific solutions or challenges. The chosen participants of special purpose cohorts will run concurrently within the Sandbox, but independently of the cohorts running bi-annually.

TECHNOLOGY

WHAT DOES THE SANDBOX LIFECYCLE MEAN FOR PARTICIPATING COMPANIES AND BUSINESSES? The Sandbox Lifecycle will consist of the following six stages:

TESTING PERIOD

PROPOSAL STAGE

SELECTION STAGE

At the proposal stage, interested participants will have two months to submit a Sandbox proposal which will be used by the MFSA to determine whether or not the eligibility criteria have been satisfied. Subsequently, during the selection stage, a limited number of proposals will be chosen to proceed to the following stage, wherein they will be requested to submit their Sandbox application, which will be used by the Authority to perform its fitness and properness assessment. Upon being granted a provisional authorisation, Sandbox participants will be allowed to start testing their proposal. Throughout this Sandbox testing stage, all Sandbox participants will be closely monitored to ensure that they adhere to the applicable regulatory requirements, including the conditions specified within the provisional authorisation, whilst maintaining close dialogue with the MFSA. During the fifth stage, while participants continue to provide their services, the MFSA, together with the participant, shall evaluate whether the participation within the Sandbox was successful. The respective exit strategy, which would have been discussed and agreed with the MFSA during application stage, will also be determined on this basis.

Dr Christopher P. Buttigieg, Chief Strategy, Policy and Innovation at MFSA, addressing the 120 participants at the recent Regulatory Sandbox workshop during his welcome speech. 66

APPLICATION STAGE

SANDBOX TESTING STAGE

SANDBOX TESTING & EVALUATION STAGE

SANDBOX EXIT STAGE

AFTER THIS TESTING AND EVALUATION STAGE, WHAT HAPPENS TO THE COMPANY OR BUSINESS? Following this phase, participants implement their exit strategy, which will cater for the following scenarios: Discontinuation of the financial innovation; Extension of authorisation to operate inside the Sandbox; Conversion of the provisional Sandbox authorisation to the applicable authorisation with conditions; Conversion of the provisional Sandbox authorisation to the applicable authorisation without conditions. WHAT IS THE MFSAâ&#x20AC;&#x2122;S VISION FOR THE FUTURE IN THIS RESPECT? As the single financial services regulator in Malta, and in line with its Vision 2021, the MFSAâ&#x20AC;&#x2122;s mission is to contribute towards the stability and sustainable growth of the industry, while at the same time protecting consumers of financial services. Building on its FinTech Strategy, the MFSA will continue working towards establishing Malta as an international FinTech hub which supports and enables financial services providers to infuse technology in product- and serviceofferings and drive innovation. In this respect, the design of the Regulatory Sandbox will prove to be the perfect tool to achieve this vision, providing the opportunity for participants to test the viability of their innovations.

BUSINESS

Gozo Innovation Hub:

innovative businesses

A new space for

ozo is increasingly becoming the place to do business smartly and innovatively, and the Gozo Innovation Hub being co-financed through the European Regional Development Fund (ERDF) is set to further strengthen the island’s potential in this regard.

With a pipeline of prospective tenants who have already applied to be hosted at the Hub, Malta Industrial Parks is not just looking at quantity, but is in pursuit of quality tenants with innovative projects. Among the first to be allocated space are companies partnering with global giants Microsoft and Google, who will be working on some of their respective projects through an operation at the Gozo Innovation Hub. Last August, Microsoft announced it would be partnering with Gozitan IT specialists J2 Group

in order to work on the Microsoft CityNext project, which seeks to empower citizens and cities through the use of Artificial Intelligence (AI). As part of their joint research and development, Microsoft and J2 will be conducting pilot projects in Gozo to explore efficient ways for the implementation of this technology, which may lead to a substantial contribution in various areas such as health, tourism, traffic, supply-chain management and logistics. The investment was announced on the same day that Malta Industrial Parks signed a Memorandum of Understanding with the Ministry for Gozo, Malta Enterprise and MCAST to collaborate on various initiatives aimed at facilitating innovative investment in Gozo, and enhancing education programmes within this sector. It followed on another major investment – announced in November 2018 – that would see Italian company Noovle also set up at the Gozo Innovation Hub. A Google Cloud Premium Partner, Noovle had announced it would set up its research centre on

BUSINESS

the island from where it would offer solutions related to cloud, hybrid cloud, machine learning, blockchain, and ICO processes to its clients. Such investments are testimony to not only Malta’s, but also to Gozo’s potential as an ideal location for doing business within the sectors related to those new technologies that will be shaping our future, such as AI and machine learning, bio-informatics, cybersecurity, digital ledger technologies (DLTs) including blockchain, and the Internet of Things (IoT). Given the country’s resilient infrastructure with multiple links to the rest of the world, these sectors are not limited in any way by the islands’ insularity. On the contrary, the islands can actually serve as an ideal base where to come up with innovative ideas, develop them, try them out in a pilot project with a small test base and at a contained cost, and then share them on the global market once they have proved to be successful. Gozo in particular lends itself perfectly for such pilot projects in view of its smaller size and population. With the laying down of the new fibre optic cable and the introduction of the fourth ferry vessel that has significantly reduced waiting and crossing time between the two islands, Gozo is overcoming the barriers and challenges that used to hinder business growth. Conscious of this, the local authorities have worked diligently to establish a very competitive institutional and legislative framework through which companies in these sectors can thrive, with Malta Industrial Parks being entrusted with the development of various projects that would provide the physical infrastructure that such companies may require to operate. Previously focused almost exclusively on the industrial estates around the Maltese islands,

which mainly housed manufacturing companies and crafts, Malta Industrial Parks has expanded its portfolio and also provides space for high-tech companies, providing quality and innovative spatial solutions which complement the needs of this strongly emerging sector. In this respect, Malta Industrial Parks is looking at providing other ancillary services in an integrated manner, such as gated facilities, break out areas, underground parking, canteen facilities, and adequate landscaping to create an environment worthy of the new and emergent technologies. Complementing the hard infrastructure within such centres or hubs, Malta Industrial Parks also offers services to its tenants, comprising round-the-clock security services, shared receptionist and secretarial duties, and also any other service that tenants may require during the course of their work. The Gozo Innovation Hub epitomises this shift, although Malta Industrial Parks is also working on other projects that will likewise provide the space for new technologies – possibly in collaboration with or entirely within niches in different industries, such as the Malta Life Sciences Park. THE GOZO INNOVATION HUB Located on the outskirts of the Xewkija industrial estate on the way towards Victoria, the Gozo Innovation Hub is a unique campus-style development offering a wide array of services, all aimed at helping new companies set up with ease and then operate successfully. The Gozo Innovation Hub comprises two main buildings linked together by means of a covered walkway, and having an outside area between them that not only creates a better working environment, but could also be used for events. Visitors enter the premises through the reception within the administration building, which also houses additional facilities such as a conference hall, meeting rooms, administrative offices, a kitchenette, and other shared facilities that could be used by all tenants. The larger building, spread on two floors and having a total area of 9,000 square metres, is the business centre. Each floor comprises a number of open plan business units, ranging in size between 85 square metres up to 270 square metres, with the possibility of interlinking units should the prospective tenants require. Administered by Malta Industrial Parks, the Gozo Innovation Hub is the only business centre having a Government interest that is solely dedicated to innovative high-tech companies focusing on projects arising from new technologies. It also enjoys the full support of the Ministry for Gozo, which among others provides an incentive to assist companies hire new employees. Through this incentive, companies that set up at the Gozo Innovation Hub may get a refund of 30 per cent of the average median wage up to a maximum amount of €6,000 for every employee that is offered a contract of three years or more. Malta Industrial Parks Ltd, 88, Msida Valley Road, Birkirkara. T: 2264 4400; www.mip.com.mt

CORPORATE

eCabs: On a mission to bring a change in Malta’s

mobility culture

IN ITS 10TH YEAR OF OPERATION, ECABS TODAY BOASTS IMPRESSIVE GROWTH AND A SIGNIFICANT OPERATIONAL FOOTPRINT, MAKING THE COMPANY THE LEADING TRANSPORT SOLUTIONS PROVIDER IN MALTA WITH INTERNATIONALISATION ASPIRATIONS. ECABS CEO MATTHEW BEZZINA DISCUSSES HIS ONGOING QUEST FOR HIGHER STANDARDS IN SERVICE PROVISION, AND HOW TECHNOLOGY HAS ENABLED THE BUSINESS TO EVOLVE. Our idea was born out of a mix of two elements: firstly, our academic formation in business and law, which enabled us to structure our approach to problems, and secondly, our vision for shaping a business which uses technology to revolutionise a sector conspicuous for its failings and shoddy service.”

“

“The idea can be summed into an aspiration to be a prime mover in the solution to what was already becoming a huge traffic problem. We wanted to provide a feasible personal transportation alternative to people and kick-start a change in culture and mentality. Today, 10 years down the line, we look back with pride and satisfaction, but we also look forward to the next revolution we want to trigger.”

eCabs started from a start-up, but today, the company is acknowledged as a major player in the mobility sector. What got the company to where it is today?

“Like many other successful ventures, we faced a tall order of challenges along the way. If I had to pin down one critical success factor that is at the heart of our growth results, that would be the nexus between our vision, the commercial strategy and the implementation of our business plan. Coming from the tightly-knit logistics environment, for us, planning is a religion which we practice at all levels of our company: from the boardroom to our facilities management function.” “Equally important was our re-investment culture. We were never after enjoying the fruits of our labour by reaping them but by re-investing every single penny back into the business to make it stronger, more resilient and future-ready.” “Today our fleet runs into hundreds of cabs and is by far the largest owned in Malta and certainly the most dynamic one in terms of growth and diversity. However, we look at our fleet as a tool in our business. The heart is our vibrant workforce. We employ over 700 individuals across all

CORPORATE

departments, each of which has a crucial function in the value chain of eCabs.” “Our logistics centre team runs the operation with clinical precision, based on a technology platform developed and supported by our brilliant tech team, which provides both consumer apps for booking and driver apps for service fulfilment by our highly-trained and competent drivers, all of whom are supported by our call centre operators. This is the beauty of eCabs: the ability to deliver change in mobility by bringing people together.” Mr Bezzina refers to the company’s control centre as the heart of eCabs’ operational set-up, a melting pot of all the activity driving eCabs. “Our logistics and control centre, which operates on a 24x7 basis and runs at exceptional efficiency levels, optimises the company’s service and operational capacity. At any point in time, the centre is manned by around 20 people who handle all the incoming bookings and requests that come through our website, through email, phone, social media or our mobile app. The control centre gives us the visibility in real time of all our fleet and the IT platform enables our operators and drivers by devising the best route possible for them. Our systems are built with a complex web of algorithms to optimise the whole operation in realtime, even at peak operational levels.” One aspect that defines eCabs is its use of “smart technology”. Mr Bezzina stresses that from day one, eCabs has been run as a technology company that seeks to enable passenger transport solutions to address congestion challenges in Malta. “It is true that we move people but what differentiates us from other operators is that in our case, IT lies at the heart of our vision and can be considered to be the nervous system of our operation. As a matter of fact, our intellectual property has grown to the extent that we are now spinning off our ICT operations into a dedicated company, in order to enable it to provide services to third parties, locally and internationally. With this in mind, when we describe our technology as ‘smart’, we mean that the technology is an intelligent one that is constantly aggregating the mobility data that we have been accumulating over the years to improve the services that we offer.” eCabs has grown to the extent that, like many other companies, it has felt the need to hire workers of other nationalities. In fact, the real challenge is not to retain these workers but to find workers who are committed enough to enter this sector. “Today, the talk of ‘foreign workers’ needs to stop. There is no such thing as ‘foreign’ workers. There are workers who decide to make Malta their home, they decide to commit to working, and they work. At eCabs, we have an encouraging number of nonMaltese workers who receive continuous training, assisted by our technology and communications infrastructure. As we speak, we are striving to widen the catchment of our workforce to attract talent from

all walks of life, with the only underlying pre-requisites being the willingness to learn and the unquestionable commitment to passenger safety and service delivery.” Human resources was always the biggest challenge for eCabs, especially when the company was starting up. The company acknowledges that it operates in a highly human resources-intensive environment and the limited pool of people willing to work in a disciplined and structured environment is a somewhat challenging factor, albeit not impossible to address. “But even here we’ve changed the culture within the sector, and women too are applying to join us as drivers. In fact, one statistic I’m most proud of is that 20 per cent of our drivers are women. We do not only believe in equal opportunity, but we enable it in practice.” Another challenge for eCabs is that the roads are becoming busier and busier. Mr Bezzina believes that although the current infrastructural works may provide a temporary relief, especially for congested hotspots, his experience-based opinion is that this is not the optimal long-term solution. “Our roads are not able to take on the quantum number of vehicles being put on them and any longterm strategy should be anchored on changing culture and not merely burdening infrastructure further to accommodate more congestion. And when you change the mind-set of people, you can achieve greater things.” “This is what we have been doing at eCabs – promoting the reality that a change in culture and mentality is indeed possible. With the use of technology, we are making it easier and cheaper for people to be encouraged to leave their car and start using cabs. It is not a change that will happen overnight, it will take years. But we’re managing because if we weren’t, we would have been out of business a long time ago. If we can do it, so can the rest.” Looking to the future, Mr Bezzina sees eCabs’ commercial vision as second to none, and says that a lot will be happening over the coming months to reinvent the industry. “I believe that our proposition, based on best practice and operated through an integrated IT infrastructure, that we have developed in-house and built and rebuilt over these past 10 years, is a unique one. The huge amount of movement data we collate every day contributes to a constant improvement in the service at all levels, particularly for route optimisation.” “The coming months will see us engaged on initiatives at all levels. From deploying new features on our consumer app, to the provision of new transport products, up to the internationalisation of our business model. As eCabs is growing into one of the largest corporates on this island, we intend to expose our achievements on the international stage to tap into the scale of markets beyond our shores.” 71

PROPERTY

Registering on the blockchain: Maltaâ&#x20AC;&#x2122;s property sector

Shaking up

PROPERTY

AFTER GOVERNMENT INTRODUCED A SUITE OF LEGISLATION TO REGULATE MODERN TECHNOLOGIES SUCH AS BLOCKCHAIN, THE NEXT STEPS ARE NOW BEING TAKEN TO INTRODUCE SUCH TECHNOLOGY IN DAY-TODAY LIFE. HELENA GRECH DISCUSSES BLOCKCHAINBASED REGISTRIES WITH INSIDERS IN THE WORLD OF PROPERTY AND COMPANY REGISTRATION TO FIND OUT MORE.

hen Prime Minister Joseph Muscat announced last June that rental contracts in Malta will have to be registered on a Distributed Ledger Technology (DLT) system, such as blockchain, real estate companies collectively applauded the move.

In fact, this was one of the proposals put forward by real estate agents when they were asked to provide input in 2018 during a consultation period on a proposed reform for Malta’s rental sector.

Photo: Viewingmalta.com

Following Government’s moves to position Malta as a Blockchain Island by introducing a suite of regulations intended to provide legal certainty and legitimacy to blockchain technology, technological arrangements, Initial Coin Offerings and similar technologies, the next steps appear to be employing such modern technology at a state level in the provision of public and business services.

PROPERTY

As confirmed by a Government spokesperson, it is being envisioned that the onus to register the rental agreement between the landlord and the tenant would be on the former, likely online, while Government would then proceed to register that agreement onto a blockchain platform. The new system is set to come into force in January 2020, with the rent reform Bill likely to have passed the first and second reading in Parliament by the time this issue of Blockchain Island is published. It is currently in committee stage, and the Malta Developers Association, following a meeting with landlords, expressed its preference for certain aspects – such as the requirement to have and register a contract – be changed before being finally approved in Parliament. On the implications of using a blockchain-based registry for rental contracts, Parliamentary Secretary for Social Accommodation, Roderick Galdes, who spearheaded the rental reform proposals, says “simply put, the system offers more protection and peace of mind to both lessor and lessee.” He explains that using a blockchain-based register will provide an “immutable,” or tamper-proof, “record of a rental agreement and associated contract terms.” Due to the inherent nature of DLT, he adds that such a system would be “tamperresistant,” staving off any issues surrounding the authenticity of a document.

Simply put, the system offers more protection and peace of mind to both lessor and lessee. Roderick Galdes, Parliamentary Secretary for Social Accommodation

Mr Galdes adds “the system is public, and therefore transparent,” however, “access or authorisation is required to view the data,” striking a balance between the public’s right to accurate and timely information, and individual privacy. He says that the adoption of smart contracts, a form of self-executing code running on the DLT platform, “ensures the proper construction of an agreement and may be used to enforce certain conditions.” Alan Grima, CEO at Dhalia Real Estate Services, is in agreement that “the online registration of rental contracts should increase the level of transparency in the market,” and that “blockchain is primarily a distributed database which can practically ensure the consistency and immutability of such data.” He agrees that the ability to implement smart contracts on the blockchain will allow for processes between landlords, tenants and the authorities to be executed in an automated way. Asked whether he believes the introduction of such a system is expected to have a significant impact on the profession of realtors, Mr Grima does not expect this to be the case as it primarily shifts the element of trust between the lessor, lessee and the authorities.

PROPERTY

Photo: Viewingmalta.com

Blockchain is primarily a distributed database which can practically ensure the consistency and immutability of such data. While discussing other technologies which could be used to aid the real estate sector in general, Mr Grima says that he has observed “an increased level of interest in new technologies such as virtual property tours and smart homes. In fact, Dhalia had actually introduced virtual property viewings as a service way back in 2016, and we are now seeing these technologies becoming mainstream.”

Alan Grima, CEO, Dhalia Real Estate Services

Managing Director at Engel & Völkers Sara Grech, Benjamin Tabone Grech, discusses the possibility and benefits of extending the blockchain-based property registry beyond just rental contracts. While the subject has been discussed casually by authorities and experts, there has been no concrete announcement on such a move. Mr Tabone Grech says that the greatest advantage of this extension would be a drastic improvement in the process of title-transfer when purchasing a property. As things stand today, a notary must be engaged to carry out research on the title of the property to be purchased, on the basis of the individual who currently owns it. The notary then proceeds to carry out checks of any hypothecs, debts and securities that the owner may have taken out on the property before drawing up the final deed for the title transfer. Mr Tabone Grech explains that “because the hypothecs and the register of the title are on the owner of a property personally, the buyer is not able to verify if the title of that property on a particular piece of land, within a block, is clean.” Turning to how blockchain technology can assist, he asserts that when all property contracts are registered on a blockchain platform, this would pave the way for all

title documents and land registration to be plugged into the same platform. Mr Tabone Grech argues that if the entire Registry is digitised, “people looking to buy a property only need to have a notary check who the previous property owner was, because previous title documents are already checked against the Land Registry via both being registered on a blockchain platform.” 77

PROPERTY

Mr Tabone Grech goes on to explain that in essence, “what this would do to our economy is speed up the time it takes to agree on a promise of sale, one of the first steps in purchasing a property.” He observes how currently, “it takes six months to reach the promise of sale stage (konvenju), but with this technology it could take just three weeks.” Asked what other technology Malta could be employing to improve the property sector, he draws attention to issues surrounding public information. “In Barcelona, you can pay €200 per month and this provides you with access to the average price per square metre of different zones within the city. In Malta, despite the fact that certain information should be public, it is still difficult to access it.”

It takes six months to reach the promise of sale stage (konvenju), but with this technology it could take just three weeks. Benjamin Tabone Grech, Managing Director, Engel & Völkers Sara Grech

In addition to the property sector adopting blockchain technology at a national level, Prime Minister Joseph Muscat also announced last May that the Registry of Companies will be the first agency in the world to run on a blockchain-based system – a move which is expected to take place by the end of 2019. Joseph Farrugia, Registrar at the Malta Business Registry, explains how the process will work. “A number of bottlenecks have been identified [in the company registry system] and a new proposed solution has been outlined. This system will make use of modern technologies and allow the Registry to update its processes in order to become more efficient, secure, and ultimately provide a better service to the business community.” Delving into how this is expected to work, Mr Farrugia says that the proposed system will be “developed using the latest blockchain technology at hand and it will manage the workflow of processes performed by the Registry. Customers will be able to initiate processes on a distributed ledger and Registry of Company Agency (ROCA) officers will be able to manage these processes using the same ledger.”

PROPERTY

He adds that “this will increase the efficiency of the processes and ensure transparency and auditability.” Indeed, in keeping with the goal of making the entire process more straightforward, Mr Farrugia adds “the people will be using a more user-friendly system, particularly in the registration stage and online services.” Interestingly, “the system will include AI features which will speed the process which currently is being done manually.” Reducing “unnecessary bureaucratic procedures” is another goal of the project, Mr Farrugia says. “The processes adopted by the Registry of Companies have been in place for a number of years. Technological advancements over recent years have given rise for the need for these processes to be updated in line with industry standards and expectations.” Indeed, Malta, like many other small islands, expends much effort into attracting foreign investment. In view of this, Mr Farrugia says that “as a leading jurisdiction in the field of company registration, Malta has up until now lagged behind and is unfortunately losing its former attractiveness as a jurisdiction.” Hence, its reinvigoration, through the use of innovative technology, is of critical importance.

This system will allow the Registry to update its processes in order to become more efficient, secure, and ultimately provide a better service to the business community. Joseph Farrugia, Registrar, Malta Business Registry

BUSINESS

Nisi

Per Virtutem ‘Nothing is achieved except through excellence’ By Joseph Anthony Debono, Senior Advisor – Zeta

ne of the most remarkable but overlooked characteristics of Distributed Ledger Technology (DLT) is that it is revelatory. It is overlooked because it comes wrapped in nebulous language, and predictions that are both sensationalist and alarming.

People speak of it in words that bear all the nuances of unease – ‘disruptive’,‘revolutionary’, ‘decentralising’. There is a chasm in the language between the primary meaning of the words that describe DLT, and the emotional nuances that come with them. For DLT gallops towards us on the back of technology few understand, and in its wake come words that disturb as much as they disrupt. Let us change our language and try again. The Ancient Greeks had two words that seem particularly relevant to DLT. The first is ἐπιφανής (epiphanes), whence the English ‘epiphany’. The second is ἀποκάλυψις (apokalypsis), our English ‘apocalypse’. Now, ‘epiphany’ means a manifestation of a remarkable nature. DLT is indeed such a phenomenon for, though difficult to understand, once it manifests itself clearly, it has a life-changing impact. ‘Apokalypsis’ originally meant an uncovering of the head, eventually a revelation (an uncovering) of future times. DLT too carries this sense, for it portends a future very different from what we might have predicted a decade ago. There is more meaning here. For Epiphany is the first act of the Christian New Testament, the first manifestation of the Messiah to people, and the Apocalypse, the curtain call

Michelle Oakes Business Development Director Michelle.oakes@zeta-financial.com Follow Zeta www.facebook.com/zetafinancial; www.linkedin.com/company/zeta-financial; www.twitter.com/zetagrouptweets; www.zeta-financial.com

56, Ground Floor, Europa Centre, Saint Anne Street, Floriana T: 2011 9700

BUSINESS of the same work, is a theological prophecy of the world to come. The Epiphany and the Apocalypse, are effectively the messenger of a new destiny, a manifestation of an infant technology, and the revelation of the infant technology’s future impact. In ‘DLT Malta: Thoughts from the Blockchain Island’ that I co-edited with Patrick L. Young, Chairman of the Blockchain Malta Association, I had used a similar image. I had compared DLT with the titan Prometheus destabilising the Olympian Order of things. The Promethean image is heroic but as violent and disruptive as people fear. There is no need for this – for there is a difference between these two images. The Promethean hero is individual, stormy, and violent. But the theology of the early Christians spread through humble individuals, gathered in little nodes called churches, working to connect and share their lives through similar nodes across the Roman Empire, that larger institution that brought so much law and civilisation into the world, but that would experience dramatic evolution as the nodes of Christianity spread through its provinces. DLT achieves two hitherto unimaginable goals. It disestablishes central authorities. One need not dwell on the technicalities. Hitherto all interactions that needed commitment had to be witnessed, guaranteed and sanctioned by a central, higher authority. Transactions between individuals were not possible without this system growing more pervasive as society became more complex. Even during phases of commodity money, which one would think would not be dependent on central authorities, such commodity money could not serve as legal tender unless it bore the marks of the state that issued it. Secondly, it divests money of its physicality, making it digital, programmable, and automatically executable. In so doing, DLT creates the golden potential of a world in which individuals can fully transact and contract with each other regardless of parameters such as quantity, asset, distance, complexity. In such a world, there will be less need for superfluous structures, organisations, and processes, cutting down unnecessary burdens on economic activity and social life, as well as devolution of power to more intimate cells of government. The trouble with prophecy is that it is usually taken as inevitable. It is never the case. We do not know what the future will look like. The future will be what we make it to be. Malta, due to the foresight of its leading experts and legislators has won a place at the forefront of this epiphany. The Maltese jurisdiction was the first to design from the ground up a legislative framework to regulate DLT assets and technologies.

The work does not stop there. As the authorities indefatigably work to fine-tune the legislation they have passed, and our technocrats prepare our next steps, we must remember that all of us have a role to play in uncovering a future in which DLT reaches its full potential. There are three factors that practitioners and actors need to manifest – expertise, integrity, and fair pricing. A nascent technology needs research not just from University academics, but from everyone active in the ecosystem. Without seeking knowledge passionately and daily, Malta’s edge will soon be blunted. Likewise, no organisation or jurisdiction can prosper without unimpeachable integrity. A blunder may be forgiven. Bad acting attaints us all. Finally, it is useless offering expertise and integrity if our pricing is not commensurate to what we are offering. Unless we find ways of competing in this respect too, then the virtues of our jurisdiction will be ignored. Virtue – The Latin word ‘Virtus’ means excellence. The three qualities outlined above – Expertise, Integrity, Competitiveness – are undoubtedly all manifestations of the highest excellence. Zeta is a financial and corporate services company that has been preparing to offer services in DLT and FinTech for a number of years. It approaches its mission on the basis of the outlined philosophy of excellence, and it is this philosophy that guides us in everything we do. In the spirit of its philosophy, we invite you to reflect on the Latin phrase above: ‘nisi per virtutem’ – (nothing is achieved) except through excellence. Joseph is a historian and classicist whose attention turned to cryptocurrency and DLT in 2016. He has been researching and studying the sector ever since. He is co-editor of ‘DLT Malta: Thoughts from the Blockchain Island’, and a Senior Advisor at Zeta Corporate and Management Ltd. He is one of the panellists at the ‘Blockchain & Artificial Intelligence: where are they taking us?’.

EDUCATION

Blockchain and education:

prepared for the industry?

Is Malta’s workforce

WE’RE LIVING IN AN ERA WHEN EVERYTHING IS BECOMING ‘SMART’ THANKS TO REVOLUTIONARY TECHNOLOGY LIKE THE INTERNET OF THINGS AND BLOCKCHAIN. THIS INCLUDES CLASSROOMS AND CERTIFICATES. BUT HOW IS THE EDUCATION SYSTEM PREPARING AND WILL THIS DISRUPTIVE TECHNOLOGY REALLY AFFECT EDUCATION? CASSI CAMILLERI SEEKS TO FIND OUT. n the early 2010s Malta was dubbed the ‘iGaming Capital’. Since then the industry has grown to represent over 13 per cent of the local economy, according to the National Statistics Office. Now, however, there is a new title in town – ‘Blockchain Island’. With all the DELTA summit events making headlines and Apple co-founder Steve Wozniak recently announcing that he is setting up a new blockchain company called EFFORCE in Malta, things seem to be moving fast. But there is one concern that keeps being raised – the lack of manpower.

The most recent European Company Survey published in 2013 by Eurofound – the EU agency that provides knowledge to assist in the development of better social, employment and work-related policies – reported that 39 per cent of European Union-based firms found difficulty in attracting STEM professionals, and Malta is no exception.

EDUCATION

The Masters programme includes a three-week applied project that will allow for students to focus specifically on industryrelevant problems. Joshua Ellul, Coordinator of the Masters in Blockchain and Distributed Ledger Technologies, University of Malta

Local media across all platforms has highlighted the issue of the STEM skills gap, and organisations like the Malta Council for Science and Technology have responded. Earlier this year, the Council launched an Erasmus+ project entitled RAISE that includes an Ambassador Programme to empower young students to take up the STEM mantle and rally young people into the field. However, initiatives like this, while admirable, take time to reap results, which begs the question: how is Malta preparing its workforce for this burgeoning blockchain industry now? At the University of Malta (UM), the newly-established Centre for Distributed Ledger Technologies is offering a multi-disciplinary Master of Science in Blockchain and Distributed Ledger Technologies. One of the first courses of its kind, it will see its first student intake in October 2019. The aim is to provide an introduction to the various disciplines within the field, giving particular attention to three areas of specialisation: ICT, law and regulation, and business and finance. Students can expect to learn about smart contracts and technology assurances by experts including Prof. Gordon J. Pace, and to gain an understanding of cryptography and how it is being used in DLT technology, leading to a deeper discussion on information security matters which are so pertinent today.

Other credits, such as the one coordinated by former UM rector Prof. Juanito Camilleri will provide students with a broad view of real-world challenges and solutions, and another delivered by business and innovation expert Prof. Russell Smith, will delve into creativity and innovation; guiding students through the process of identifying or creating new profitable opportunities; and going from idea, to product or service development. The Masters course also provides opportunity for research and development in the field, which can also make it appealing to forward-thinking entrepreneurs. According to course coordinator and Chairman of the Malta Digital Innovation Authority, Dr Joshua Ellul, â&#x20AC;&#x153;the programme includes a three-week applied project that will allow for students to focus specifically on industry-relevant problems. More so, students may choose to undertake a dissertation that is aligned with industry cutting-edge problems.â&#x20AC;?

EDUCATION

Having begun accepting applications around May, Dr Ellul says that interest is high. “We cannot quote the number of students accepted, however we've received over 60 applications which we are currently processing,” he adds. Working professionals may opt to take the Masters on a part-time basis, or consider alternative educational paths. “Last year, within the University’s Centre for Liberal Arts and Science we organised two evening courses: a general introduction to blockchain for a non-technical audience; and a technical unit focusing on blockchain and smart contracts,” explains Dr Ellul. While these specific credits do not seem to be available this year, “this year we plan to host a number of introductory lectures and sessions for industry players to get up to speed with the technology,” Dr Ellul clarifies. The private sector is responding to the need for more education in blockchain and DLT too – from STC Higher Education to IGA Training’s Blockchain Academy, to name a few. Both traditional, as well as masterclasses are available. The IGA’s Blockchain Academy specifically claims to be “built for business”, with the aim to “teach blockchain fundamentals, explore potential implementations and introduce key practical considerations.” The education arm of IDEA Management Group – offering a wide range of management, research, training and education services – the Leadership and Management Institute, is currently offering an M.Sc. in Management with specialisation in human resource management, project management or blockchain management, which will also be starting in October this year. Lectures are held once a week in the evenings over a period of 30 months, totalling 300 contact hours. According to the Institute, the course is ideal for FinTech professionals such as financial managers and controllers, bankers and other experts in the field. Acknowledging the challenge being faced by the labour market due to the skills gap, Managing Director at IDEA Leadership and Management Institute, Dr Silvio De Bono, remains positive. “Courses similar to the ones we, and other education institutions, have launched in this area, are testimony that efforts are being made by different parties. This augurs well as the first step in the right direction.”

EDUCATION

Moreover, earlier in May, through an agreement between the UM and the Malta Information Technology Agency, Parliamentary Secretary for Financial Services, Digital Economy and Innovation Silvio Schembri awarded the first Blockchain and DLT scholarship grants to 19 students, through an investment of €300,000 split over three years. Dr Joshua Ellul believes this to be the beginning. In his view, these training courses for industry professionals at the UM and the focused DLT Masters course are “short-term requirements, however action to tackle the long-term requirements needs to be taken.” On this note, Senior Advisor to the Ministry for Education and Employment (MEDE), Dr Alex Grech agrees, noting that we are still in “early days.” However, “there are people waiting to see how pervasive a technology blockchain and AI are going to be in everyday life,” he adds. In reality, blockchain is already being implemented in various areas beyond the financial and legal spheres. In a Science for Policy Report published by the Joint Research Centre – the European Commission’s science and knowledge service – entitled Blockchain for Education, which Dr Grech built with his colleagues, it is stated that, “within

Courses similar to the ones we, and other education institutions, have launched in this area are testimony that efforts are being made by different parties. This augurs well as the first step in the right direction. Silvio De Bono, Managing Director, IDEA Leadership and Management Institute

education, activities likely to be disrupted by blockchain technology include the award of qualifications, licensing and accreditation, management of student records, intellectual property management and payments.” To this end, in Malta a collaborative effort led by Dr Grech saw the BlockCerts project being launched. The pilot project, which has since been scaled up to include all state, church and independent schools, sought to put educational certificates on blockchain. The primary guiding principles behind BlockCerts were to guarantee the safety of personal information, minimise bureaucracy, and give students and professionals instant access to their own credentials. The technology could put to bed countless hurdles that can hold people back in their lifelong learning journey. It avoids people being denied scholarships, job offers or visas for travel, due to paperwork not being delivered in a certain way. It also empowers businesses to verify claims on CVs and job applications much more quickly. Everybody wins, especially in today’s world when education is no longer considered something that stops at a degree or Masters certificate.

EDUCATION

Notably, the UM is not a part of the BlockCerts project. “When [BlockCerts] first began, the Institute of Tourism Studies (ITS) joined, The Malta College of Arts, Science and Technology (MCAST) joined, the Ministry for Education joined and became the project manager for this project, and so did the National Commission for Further and Higher Education (NCFHE),” notes Dr Grech.

Within education, activities likely to be disrupted by blockchain technology include the award of qualifications, licensing and accreditation, management of student records, intellectual property management and payments.” Alex Grech, Senior Advisor, Ministry for Education and Employment

This said, UM pro-rector for research and knowledge transfer, Prof. Ing. Saviour Zammit assures that “the University will shortly be part of the project. We are in the process of making an agreement with MEDE in this regard.” Prof. Zammit clarifies that the reason for the delay is that “UM plans IT systems years ahead, as these need to be very carefully integrated into a complex set of systems we have. We will be participating in the BlockCerts project the earliest we can possibly do so, with the resources available.” Most communities and Government consider education as a top national priority, rubbing shoulders with healthcare and finance. Data security and protection is critical in the latter, and it should be the same in schools and educational institutions. With internationally-connected businesses and online work becoming increasingly standard, easy access to credentials is an asset for individuals and businesses. While it may be that blockchain use in education is still very new and unexplored, the potential is clear. On the issue of finding the right people for the industry, Dr Ellul is confident that needs will be met. After all, “Malta has attracted sufficient talent within the iGaming sector,” and many of those people “have a large overlap of skills required to work within the DLT industry.”

ARTIFICIAL INTELLIGENCE

Enriching

education and stimulating growth through AI ADVANCES IN ARTIFICIAL INTELLIGENCE (AI) HAVE PLACED THE TECHNOLOGY HIGH ON THE GLOBAL AGENDA, WITH AMBITIONS GEARED TOWARDS EDUCATING SOCIETY, AND ITS WORKFORCE, TO ADAPT TO THE ‘FOURTH INDUSTRIAL REVOLUTION’. TO THIS END, MCAST’S APPLIED RESEARCH AND INNOVATION CENTRE (ARIC) HAS RECENTLY LAUNCHED THE COLLEGE’S AI STRATEGY. REBECCA ANASTASI TALKS TO ITS AUTHORS, DR ALEX RIZZO, EDWIN ZAMMIT, STEPHEN J. HALL AND DR JOSEPH FALZON TO FIND OUT WHAT THE FUTURE HOLDS. ver the last few years, developments in Artificial Intelligence (AI) – and the concomitant use of machine learning and Big Data – have pushed policy-makers to prioritise programmes which harness the technology’s transformative power. Indeed, in a Science for Policy report, issued by the European Commission last year, AI was quoted as being “the next electricity”, with the publication stressing that reinvention is key for societies and economies to adapt to the industrial and cultural change such technology will precipitate.

In parallel, here in Malta, in March of this year, Government published a consultation document on the island’s national AI strategy, outlining its vision to propel the jurisdiction to the forefront in the sector, thus pushing the nation to adapt to the

“fourth industrial revolution”. And, to achieve this, one of its core objectives – as outlined in the policy – is to “equip, reskill and upskill workers in every sector of society.” The Malta College of Arts, Science and Technology’s (MCAST) Applied Research and Innovation Centre (ARIC), established earlier this year, has taken the challenge head-on, recently launching a consultative document outlining the AI strategy for the college, aligned to the entity’s 2019-2021 overall strategic plan. “We’ve launched a process and this document delineates a pattern in a stream of actions to clarify a sense of direction,” says Dr Alex Rizzo, Deputy Principal of Research and Innovation, before going on to describe the Centre’s role as an “umbrella” across all of the college’s six institutes. “It’s definitely a top-down and bottom-up approach: we provide a sense of

ARTIFICIAL INTELLIGENCE

direction, but the Centre is fed by feedback from the institutes,” he explains. Indeed, Dr Rizzo, together with his team, drafted the “roadmap” in conjunction with input from the IT and engineering institutes, as well as the college’s other outfits. The result is a comprehensive framework – flexible enough to adapt to the vagaries of a changing landscape – aiming to use the technology to better prepare MCAST students for industries engaged with AI and to ensure lecturers are “more competent in understanding and applying AI in teaching, research and industry solutions.” Moreover, the game-changer, according to Dr Rizzo, is the strategy’s goal to assist and manage students throughout their learning experience with the support of AI. “Up until now, education has been stuck in time and we’ve tended to teach students in a batch processing mode. This means we get 30 students of a similar age and background, and we assume they learn in the same way. Those who don’t cope, then fizzle away. But, with AI, we’re able to individualise student learning, giving lecturers the tools they need to personalise the material according to diverse learning strategies. This is new. It’s early days but we see tremendous potential here,” he explains. These ambitions were formulated after an intense process consisting of three main phases, according to Edwin Zammit, Deputy Director for Research and

With AI, we’re able to individualise student learning, giving lecturers the tools they need to personalise the material according to diverse learning strategies. Alex Rizzo, Deputy Principal of Research and Innovation, Applied Research and Innovation Centre, MCAST

Dr Alex Rizzo

Innovation. “Our preparatory phase was, perhaps, the longest, since we needed to take stock of what was happening at MCAST and see where we wanted to go. So, we met with the stakeholders at the college – some of whom had been working on AI for 10 years – and kicked off a process of internal consultation,” he states. The result was the decision to place AI at the centre of the college’s entire operations, and, thus, further research was carried out to formulate the streams of action. To this end, the team also attended key conferences – such as EdTechXEurope in London and the Sana Labs AI Summit – to gain a deeper understanding of the international developments in the field. Moreover, the Centre communicated with its counterparts in the European Association for Higher Education Institutions (EURASHE), more specifically with universities of applied sciences, exchanging knowledge and information to ensure the current document was up-to-date with the latest ideas on the subject. The second phase then consisted of “putting it all together”, Mr Zammit says, with the Centre currently in the third phase – the consultation period. “We’re awaiting feedback on the strategy from the public – both internally, within the college, and externally – as well as from industry stakeholders. We’ve even held a meeting with the Malta-AI steering committee to get their feedback,” he asserts.

ARTIFICIAL INTELLIGENCE

Dr Joseph Falzon

the aims set out by these 17 goals, colleges, universities and educational institutions must remain relevant and must contribute to the nation as a whole,” he says. Mr Zammit concurs, highlighting the way in which the college’s engagement with AI can contribute to real-world solutions. He refers to a project proposal recently submitted for funding through Interreg, the European Union’s European Regional Development Fund, aiming to use Big Data techniques to analyse the anthropogenic effects on Natura 2000 sites in Malta and Sicily through the use of drones. “AI technology will spot, for instance, areas of littering, using the data gathered from the drones to create a solution, suggesting which remediation techniques, such as clean-ups, could be used in that scenario. The system makes its own decision based on the information, saving energy and speeding up the process,” he explains.

For it is the wider community which will also be affected by the changes wrought through MCAST’s AI strategy, according to Dr Joseph Falzon, a senior lecturer within ARIC. “As lecturers coming from professional practice, we always ask ‘what does the industry want’? The wider perspective is vital for us. It’s important to focus on what’s happening outside the college to be able to put everything in perspective and into context,” he explains. “This then helps us prepare students to have a smooth transition to the workforce, and to life outside their studies, enabling them to be proactive, rather than reactive, in that they can then contribute to creating practical solutions required by their specific industries.”

However, such applied innovations require research as well as time and resources dedicated to the cause. In this regard, Dr Rizzo stresses the centrality of analytical work conducted by lecturers and academics, stating that the Centre’s strategy also allows for this, in line with MCAST’s research framework, thus encouraging the college’s teaching staff to dedicate time to research. “Indeed, we’re giving the college’s 500 plus academics the opportunity to better balance their time between teaching and project-work, which will allow them – and us – to break new ground,” he says.

Stephen J Hall

He stresses that this warrants a shift in mindset, across the board. “Of course, by prioritising AI, we don’t only mean creating courses in the subject here at the college, but we want to be at the forefront of transforming culture, opening up AI strategies to, for instance, the medical field,” he says by way of example. Moreover, according to Dr Falzon, this perspective allows the college to contribute to the realisation of the UN’s Sustainable Development Goals, launched in 2015 as part of the organisation’s 2030 agenda. These provide “a shared blueprint for peace and prosperity for people and the planet,” according to the entity, which lists objectives ranging from the sustainable use of land and water resources, and the halting of climate change, to ensuring health and education for all. “To achieve

ARTIFICIAL INTELLIGENCE

However, AI can benefit the college’s staff in many other ways, according to Stephen J. Hall, ARIC senior lecturer and Masters programme coordinator, who outlines the ways in which the technology can be applied within educational management, as delineated in the Centre’s roadmap. “AI can be deployed in the understanding of statistics, which will simplify administrative tasks, for instance. Sometimes, there’s just too much information for our academics to digest – quantitative information on class attendance, test scores, and timeliness, as well as other qualitative factors. But, the analysis of Big Data, through advanced computing and information systems, will enable us to see who is falling through the system and what can be done to tackle students differently,” he asserts. Edwin Zammit

We met with the stakeholders at the college – some of whom had been working on AI for 10 years – and kicked off a process of internal consultation. Edwin Zammit, Deputy Director for Research and Innovation, Applied Research and Innovation Centre, MCAST

But, Mr Hall also circles back to the way in which the technology can help lecturers personalise their instruction, echoing Mr Rizzo’s affirmation of the importance of AI within the college’s teaching. “Each student has a learning type and what we’re seeing is when they struggle to understand a particular topic, they revert to YouTube, finding a delivery which works with their learning type. What MCAST will do with AI is bring this within a formalised framework,” he notes. But, what challenges face the Centre in the fulfilment of its ambitious strategy? “AI solutions in education – particularly when it comes to personalised learning – are at the periphery of the field at the moment,” Mr Zammit says. “So, there’s a lot of work which is being done to get us up to speed and solutions may not come as fast as we would like.” In addition, ethical concerns arise with the use of personal data but, “there are solutions which protect each individual,” Mr Zammit stresses. Moreover, there is the “fear factor” he explains, which comes with immersing human beings in tech. “Unfortunately, we have not been helped by the film industry, which has tended to identify AI with the antagonist,” he laughs. But, on a more serious note, he stresses that while some academics are concerned that they may be replaced by technology, this will not be the case since “AI is a tool designed to support them and not replace them.” Concluding, the authors emphasise that, while the strategy’s goals will ultimately not change, how they will be applied may, as contexts alter. “The way we operationalise our roadmap will, ultimately, adjust to new technologies, new budgets and shifts within the industries we serve,” Dr Rizzo says. However, they express confidence that “the sense of direction” embedded within the Centre’s stream of actions will continue to steer the college towards its AI future.

BUSINESS

Embracing the

future car sharing with

100

BUSINESS

CAR SHARING IS THE NEW WAY OF GETTING AROUND, AND LOCALLY, GOTO IS LEADING THE WAY ON THIS FRONT, WITH ITS HIGH-TECH, ELECTRIC FLEET OF AT-THE-READY VEHICLES. JO CARUANA FINDS OUT WHAT IT’S ALL ABOUT.

uch like blockchain, the sharing economy does things differently. It throws ownership out of the window, and instead replaces it with the opportunity to have less belongings but more services.

Within that, car sharing is providing people with an alternative to car ownership all over the world. Locally, it is being spearheaded by GoTo – a company launched in 2018 that has since attracted over 8,000 users thanks to its user-friendly app and efficient network of vehicles.

Photos by Alan Carville

“Car ownership is unproductive and costly,” says Liran Golan, GoTo’s CEO. “It is helping people to move around quickly with ease, while reducing stress, time and congestion.” “We are in the middle of a revolution. One shared car can replace between 17 and 25 owned vehicles – most of which spend the huge majority of their time in parking spaces or garages. Not only is car sharing good for congestion and the environment, but it is also boosting the local economy by helping people to find easier parking in designated spots. It is a well-rounded solution.”

With car sharing already very popular in cities like London and Paris, Malta was behind the times until GoTo launched its services in October last year – but the island has caught up quickly. “We were pleased to be the pioneers of car sharing here, having already spearheaded it successfully in Israel,” Mr Golan continues. “It took off quickly – both among locals and expats.” Expats, in fact, are one of the company’s strongest demographics. “For them, it takes the stress out of getting around in Malta,” he says, “as they don’t have to worry about buying or renting. In the medium and long term, we expect more people to sign up, resulting in less traffic and congestion overall.” 101

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Our technology literally underpins everything that we do, giving us the intelligence we need to serve our clients better.

Much like car sharing services across the world, most of GoTo’s offerings rely on its cutting-edge technology. Developed by its mother company in Israel, this consists of five components – back office, billing, CRM, the mobile app and telematics. “All of these elements work together to make the service flawless and user-friendly,” Mr Golan continues. “Through it, you can reserve your car, check on available parking spaces, perform a stopover, un/lock the car and contact customer services. This technology literally underpins everything that we do, giving us the intelligence we need to serve our clients better, make necessary interventions and constantly improve our service.” And it won’t stop there, as GoTo is now looking into the development of its multi-mode vehicle sharing platform. This will allow its users to enjoy a variety of different types of transport, by offering them the shared mobility options to freely commute between one place and another.

According to Mr Golan, blockchain and AI also have a role to play in the future of how the mobility sector develops, especially when it comes to collecting information from customers about what they need from the service. “Right now, we are using our business intelligence information to improve operations, and it is really transforming the way we work,” he says.

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At the moment, this aspect of AI goes into the machine software, factoring in GoTo’s costs, employees, the traffic and parking availabilities, and more. “Very soon, though, the company will have a map in place that will give us even more information about the behindthe-scenes operations. Our next phase, using AI, will then be to tackle pricing while taking operational efficiency into account. Cleverly, it will lead to savings for both the company and our clients as, holistically, both will be able to work together using the AI we have in place and our new business intelligence to make the system as streamlined and effective as possible.” And it isn’t just GoTo’s efficiency that will be helped by blockchain, but its financing too. “We are working on a financing tool that will allow the growth of our charging stations,” Mr Golan says. “As we are using electric vehicles, we are looking into creating a currency for the renting of our vehicles. It will all be part of the pool that supports our infrastructure into the future.”

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Our next phase, using AI, will tackle pricing while taking operational efficiency into account, and lead to savings for both the company and our clients.

Vehicle sharing will continue to advance globally too, and the CEO predicts a future when driverless cars are very much part of the mobility economy. “Much of how that progresses will come down to governments,” he says, “because we rely on them to put the right frameworks in place for autonomous vehicles to function. I have no doubt that the business of car sharing will evolve into an autonomous vehicle service, but we will have to wait and see! We are certainly excited about it.”

BUSINESS

Making

digital profitable WHILE MORE AND MORE COMPANIES CONTINUE TO EMBRACE AND MAKE USE OF DIGITAL SOLUTIONS, HOPING TO GAIN A COMPETITIVE EDGE AND A LEADING POSITION IN THEIR FIELD, HELENA GRECH CATCHES UP WITH THE FOUNDER OF BEAT CONSULT, DAVID GALEA, TO FIND OUT WHAT IT MEANS TO ADVISE COMPANIES AT VARIOUS STAGES ON THE ‘DIGITAL READINESS CURVE’. 106

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s some companies travel full speed ahead into the digital revolution, and in doing so, are shaking up the way the world does business like never before, others may not have business models that fit into this revolution, or have found success in older ways of doing things.

Identifying a promising need in the market, David Galea, together with his colleague, Joseph Micallef, founded BEAT Consult back in 2015. Previously, since 2007, Mr Galea consulted companies on digitisation and digitalisation, well before such technological inventions made it to the mainstream. The company focuses on three main aspects: assisting companies to ensure compliance with legal obligations, helping companies to access finance, and assisting companies to introduce emerging technologies, including Distributed Ledger Technology (DLT) such as blockchain, the Internet of Things (IoT) and Artificial Intelligence (AI). Although aware that, in reality, only a minority of companies is ready to implement modern digital solutions such as blockchain and AI, Mr Galea and his colleagues are well positioned to assess the ‘digital readiness’ of a company, stressing that the path to digitalisation is one that should be made slowly, in a way that both makes sense and adds value to the company.

BEAT helps companies by taking a strategic and detailed look at the business model being employed.

Delving into what it means to “make digital happen profitably” in real terms, Mr Galea explains that “BEAT helps companies by taking a strategic and detailed look at the business model being employed.” He adds that as an organisation, it differentiates between “digitisation” and “digitalisation.” “Digitisation is having an existing business model and automating that process on the basis of that model. Digitalisation, on the other hand, is transforming the company by making the best use of technology, by changing the shape of that particular company.” He provides an example, using the work carried out by BEAT for a client which operates in the insurance sector.

I meet Mr Galea at his office in Naxxar. He explains that the name of the company, BEAT, has three meanings behind it. Firstly, it is an acronym for ‘Business Excellence in Achieving Transformation’, where ‘transformation’ refers to delivering a more efficient and profitable organisation. He goes on to explain its second meaning, namely “beating competition, helping clients to achieve a competitive advantage and providing them with a unique selling position”. Its third meaning, Mr Galea divulges, is that of a “beating heart,” adding that the company “focuses on the heart of a business.” This, he says, “encapsulates the heart of our motto: making digital happen profitably.” From a team of two people in 2015, the company has now grown to 12. Mr Galea says that BEAT is currently looking to grow further beyond the local market, hoping to gain a greater foothold in the international sphere. Currently, BEAT services clients in Malta, the United Kingdom and the Middle East. “We are looking to further expand our borders and we are eyeing the Eastern European markets, which are quite lucrative in our sphere,” Mr Galea shares.

“This particular client wanted to introduce an ERP solution for its organisation,” he says. An Enterprise Resource Planning (ERP) solution is a system whereby the management of business processes is integrated, often in real time and mediated by software and technology. “We were tasked with helping in the implementation of the process. We ultimately recommended that the company undertakes a complete digitalisation process and changes the way it works.” “The client was product-oriented in the way it conducted business, and upon our recommendation, it converted to a customer-oriented approach. Prior to our intervention, their products were being sold by persons who were specialised in one particular product only; person A sells home insurance exclusively, person B sells life insurance, while person C sells car insurance.” 107

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Identifying an opportunity to improve the client’s way of doing business, Mr Galea’s team “changed the concept completely by empowering workers within the company to sell a range of insurance policies, with the focus pivoting on becoming a specialist of the customer. Depending on the customer’s needs, the worker can propose the exact policy that would be the most suitable and beneficial to the client.” Explaining how this works in practice, Mr Galea says “technologically, it means that a worker needs to have a system in place which provides information about the customer. It must also be knowledgeable about the various policies the company offers, while the system must be flexible enough to encapsulate the different products, or policies, to form a unique product for the customer, tailored to their needs in a unique format.” Completely changing the way a company does business is no easy feat, and Mr Galea acknowledges that “the proposed approach entailed a complete changearound, not just in terms of technology, but also in the way processes are carried out and in what people are empowered to do. This is just one example of the value that can be provided to a client through BEAT’s services.” Due to the fast-moving pace at which the world of digital solutions is moving, combined with the buzz and sense of excitement surrounding these novel concepts, Mr Galea questions whether many companies have thought deeply about what they hope to achieve from a particular solution.

He says that with blockchain technology, many companies – especially start-ups – approach him with the same statement: “we want to disrupt a particular market by decentralising the process and applying it on the blockchain.” He adds that “many of these companies are falling into the trap of the dot-com bubble,” referring to the period in the late 1990s and early 2000s when excessive speculation on the widespread use and adoption of the internet led many companies to jump aboard, even if it did not make business sense for them to adopt an internet-based approach for the kind of service they offered, eventually causing the so-called bubble to burst. “During the dot-com bubble, many companies applied internetbased solutions in exactly the same format as a brick-and-mortar business, and most of these internet start-ups failed.” Drawing further parallels with the internet boom, Mr Galea muses that “blockchain has led to a revolution in terms of how business can be done. The internet is based on the network of information but in the case of blockchain, it is based on the network of trust, avoiding the third party.” He cautions, however, that “blockchain has to make sense where there is the need for that business model. Does the company make frequent transactions? Does it need decentralised decision-making? Are there highly-repetitive processes?” Asked about the strategy used by BEAT to tackle the needs of a client, Mr Galea says that “when analysing a business model, one must think outside of the box.”

We look through the organisation and observe where a company is on the curve of technology advancement.

“When approached by a client, we do not want them to come with preconceived ideas. Even if blockchain makes sense for their business model, it is experimental at this stage, and there aren’t many tried and tested operations to turn to today.” BEAT begins by carrying out a digital readiness assessment. Mr Galea explains “we look through the organisation and observe where a company is on the curve of technology advancement. If the company is paper-based, it would be foolish to advise them to implement blockchain technology. This first starting point would be to develop isolated solutions for different problems.”

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What’s the use of applying a blockchain solution if your company is centralised, meaning decisions have to go through a CEO or a manager? “If a company already has isolated IT solutions for different issues,” he continues, “the next step would be to figure out a way to have those solutions integrated with each other in a way that adds value to the company. We take a step-by-step approach, intended to place a company on the technology roadmap.”

Mr Galea acknowledges that blockchain, AI and IoT have made it to many a company’s radar, but realistically, there aren’t many companies ready for them, and “there are more rudimentary solutions which we advise companies to adopt when they are at certain stages of the curve.” Adopting a new approach to carrying out business involves much more than just applying technology. “It’s about changing the whole mentality and culture of how a company works. What’s the use of applying a blockchain solution if your company is centralised, meaning decisions have to go through a CEO or a manager?” Because of the way DLT works, and the associated transparency, Mr Galea highlights how it creates an ecosystem. “An organisation is interacting with suppliers and the customers on DLT, with the lines blurred between the three elements. This means that there needs to be a single coherent strategy that includes customers and suppliers in the whole value chain. That is very challenging because that means opening your company to others. Who is ready to do that? Not many are.” In such a fast-paced sector, it’s not just companies that need to stay ahead of the curve. Mr Galea adds that the team at BEAT is “constantly in training, with people studying blockchain and related technologies at Oxford University and MIT, the Massachusetts Institute of Technology. This is completely necessary since nobody is an expert on blockchain yet, and things are always changing.”

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DEA

The one-stop concept beauty studio DEA IS A ONE-STOP CONCEPT BEAUTY STUDIO, OFFERING SERVICES RANGING FROM CUSTOMISED FACIALS TO NON-INVASIVE TREATMENTS FOR CLIENTS OF ALL AGES.

“

Our specialised team is here to share our expertise and give our best to our clients,” explains founder Denise Marston.

The studio offers an extensive list of beauty services, including laser hair removal, semi-permanent make-up, eyelash extensions, professional make-up and make-up courses, nail and hair treatments, nutrition advice, massages by fullyqualified massage therapists, laser teeth whitening and spray tanning. DEA is particularly renowned for its custom facial programmes, which can combat anything from uneven skin, acne and scarring to ageing and fine wrinkles. “Our technology is laser-based with radio frequency. We also provide microneedling and pen, as well as the famous Red Carpet facial, using aqua gold needle and mesotherapy vials to nourish the skin from within. We try to provide facials here that you couldn’t simply replicate at home,” Ms Marston explains. “We also provide information to our clients about home care – the treatment doesn’t simply stop once the client leaves the studio.” And when the standard beauty treatments are not enough for what the client needs, they can turn to Dr Giovanni Scornavacca, DEA’s friendly medaesthetic doctor, who visits from Catania every two weeks and has over 20 years’ experience in his field. He specialises in non-invasive treatments for the

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face, such as peeling, Botox and hyaluronic acid to correct wrinkles, and micro-Botox, which is used by over-60s to lift the face without resorting to surgery. DEA’s services also include thread lifting, which can be used to revitalise the face and body. “Soft thread lifting can be done without local anaesthetic, while hard thread lifting requires some anaesthesia for the patient’s comfort,” Dr Scornavacca explains, adding that changes become visible between a week-to-10 days after treatment, while the collagen stimulation lasts for two months. At DEA, Dr Scornavacca also offers body treatments such as mesotherapy – which uses chemical injections to destroy cellulite, and gives more oxygen to the tissue – and micro-lipocavitation, which uses ultrasound techniques on small areas of the body, destroying cellulite and burning fat immediately. The clinic is now planning to introduce other treatments, including advanced new treatments for skin laxity, especially for arms and knees, as well as Sculptra, an injectable cosmetic which restores shape and smoothness to parts of the body which are sagging and ageing. “Looking good is no longer a luxury these days, but a must,” Ms Marston says. “At DEA, we try to offer our clients the best and most efficient beauty services under one roof, at affordable prices.”

Dea Aesthetics and Wellness, 12, Fleur De Lys Road, Birkirkara. T: 2099 5704; E: denisemarston@gmail.com

BUSINESS

Connecting Malta

with the rest of the world

FedEx aircraft at Luqa Airport, Malta

FedEx is one of the worldâ&#x20AC;&#x2122;s most respected brands, handling 11.5 million packages daily, supported by 340,000 employees, 100,000 vehicles and 657 aircrafts. It is a global market leader with an unmatched global air express network for documents, parcels and freight, linking 95 per cent of global GDP in one to three business days. Complementing this is a vast choice of services and solutions for shipping documents, parcels and freight globally to and from more than 220 countries and destinations worldwide. FedEx purchased TNT in 2016, and the seamless integration has resulted in added value to both FedEx and TNT customers worldwide, as well as the local customer in Malta. The combination and choice of services has had a positive impact for both businesses and individuals. A dedicated aircraft brings in the import shipments daily which are sorted, placed on routes and taken out for delivery same day. Meanwhile, exports are collected from all over the island, processed and also sent same day, which ensures next-day delivery within Europe and two to three days to most other worldwide destinations.

is expected to start operating from Malta, as of 1st October 2019. C&C Express Ltd is the appointed GSP for FedEx since 2017 and Associate for TNT since 1987. C&C Express has been involved in the courier business for over 32 years, and the recent integration has resulted in an increase in employees, today numbering over 65. With the support of FedEx and TNT, we have continued to receive thorough and ongoing training in each department. Training and knowledge are essential factors for a positive experience, both for the employee and the customer. We participate in global initiatives along with our international counterparts, and this has resulted in excellent relationships across the globe. For further information on FedEx and TNT services, contact T: 2558 4600; E: sales@tnt.com.mt; www.fedex.com/mt, www.tnt.com C&C Express Ltd Licensee of Federal Express Corporation; Licensee of TNT AEO Certificate No. MT AEOF 1684302118; SM EN ISO 9001:2015 Certificate No. S069

The TNT worldwide road service, which excels within Europe, also operates to and from Malta. This is an additional bonus for the customer, as it retains all the same attributes as the Express service, with competitive pricing, complete visibility, tracking online, updates and notifications, which are essential to ensure an efficient service. Third-party billing shipments are supported by FedEx International Priority, International Economy, FedEx International First, International Priority Freight and International Economy Freight. FedEx International FirstÂŽ, for early morning delivery of time-sensitive shipments to major countries worldwide,

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PKF Malta reflects on

successful bitpod webinars

KF Malta’s bitpod concept, which was launched at the beginning of 2019, has hosted a number of webinars featuring various special guests who are experts in their field. Guest speakers share real-life experiences and examples to deliver an effective session to viewers in the form of a casual Q&A format. Viewers may follow live for free and can also post questions to the speakers which will be answered during the live session.

Dr Marilyn Formosa, bitpod co-founder, says “these webinars are an offshoot of our home-grown bitpod concept, launched earlier this year, which is a quasilab that contributes to the Maltese start-up ecosystem by offering a readily available space to start-ups, and holding informal meet-up sessions for industry, start-ups and investors.”

“We have received positive feedback on our first six sessions as well as several suggestions on topics to cover in the next bitpod webinars. Our latest session was the first one focused on cryptocurrencies and blockchain, and we welcomed Adrian Kreter, founder of Instacoins – a Malta-based start-up which is a Class 3 Bitcoin brokerage,” she shares. In past bitpod webinars, various topics were tackled such as AML, fraud detection and Know Your Customer (KYC). If there’s a topic of interest you would like to discuss, contact Dr Marilyn Formosa on marilyn. formosa@pkfmalta.com The webinars are accessible through PKF Malta’s website via: pkfmalta.com/services/bitpod/bitpod-events

Blockchain skills for the IT professional he professional development of IT systems requires the IT practitioner to include specific foundational concepts of accountability, auditability, availability, identity and integrity of data records in the application. Systems lacking in these building blocks will spell big trouble. Fast forward a few years and today, Distributed Ledger Technology (DLT) provides all of this with additional and more fool-proof technical elements.

Ironically, DLT or blockchain systems are coined as complex systems, but for those who develop enterprise systems know well that including the above concepts in systems also involves a considerable level of complexity. However, using DLT could provide a better way to implement the above concepts. It is envisaged that in the near future, systems based on DLT will be a major requirement. This brings me to the issue of skills requirements for those in the ICT workforce who would like to join the blockchain arena as quickly as possible. Being an emerging sector, the continual ‘learn and adapt accordingly’ is crucial. The traditional technical skills in software development, data analytics and systems architecture are essential foundations for the blockchain technical people.

In 2018, a certain foreign recruitment firm came up with the top blockchain-related skills requested by the market. These include cryptography, python, Bitcoin, web design, blockchain platforms like Ethereum, Ripple and R3 Corda. Others include Java, Javascript, C++, C#, node.js, angular.js, React.js, HTML5, Solidity, CSS, iOS and Android App development, machine learning, and Goland. Then there are subjects like content writing, research, ICO marketing and SEO writing. It is therefore evident that with the exception of some new technologies, a lot is still based on current technology. In my view, it is essential that an ICT professional aspiring for a career in blockchain needs to acquire specific additional knowledge and competencies. This includes the deep understanding of DLT and blockchain concepts, their underlying architecture, their effect on the current legal and financial structure, and the way they will affect and transform the business model. Nowadays, several educational and training institutions have come up with their own courses or certification on the subject (e.g. University of Malta, Oxford University, MIT, Skillsoft, and PwC, to mention a few) and therefore there is no excuse for ICT professionals to become blockchainsavvy, and possibly also gain specialisation on the subject. By Carm Cachia, Chief Administrator, eSkills Malta Foundation

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BUSINESS market. Functionality, modularity and reconfigurability enable spaces to adapt to customers’ ever-more-fluid demands.

Designing for the

digital age

In Karim Rashid’s own words, when speaking about the design behind the Ottawa seating system: “There should be a sense of intimacy. But at the same time, you should be able to be very private and work in your own world. I needed the collection to be totally reconfigurable and scalable to meet all social and human needs.”

ffices are our extended home, and we have evolved into the age of casualism, where our lives are focused on comfort, ease, seamlessness and technology. Contemporary Danish furniture brand BoConcept has leveraged its decades of design expertise to extend its contract furniture arm, designing versatile solutions with personality and an essence of home at the office or hospitality venue. It’s called people-first contract furniture.

Similarly, the Toulouse seating system, by Henrik Pedersen, is designed to be flexible, whether it is a place to communicate with others, relax or find some privacy. All Toulouse modules are available in low and high back options and one can further add a partition wall to the low back sofa system and make it work as a room divider. For storage, Morten Georgsen designed the Atlanta to be a flexible modular system, consisting of storage and soft-seating modules that all can be configured to the client’s exact needs.

BoConcept has been designing, developing and producing furniture in Denmark since 1952, working with world-renowned, award-winning international designers Karim Rashid, Morten Georgsen, nendo, Henrik Pedersen and Frans Schrofer, amongst others. Broad customisation is a fundamental part of the BoConcept offering, with one of the biggest fabrics and upholstery selections on the

BoConcept’s dedicated consultants design each service package based on the client’s individual project needs. Clients can choose a full 360-degree service, comprising interior consultation, product selection, professional installation and after-sales service.

For Malta projects, contact the BoConcept Malta team, at the BoConcept showroom and offices in Triq tal-Balal, San Gwann. E: bicontract@brands.com.mt; www.boconcept.com.mt

Display the future with NOVO Specialists in Digital Signage Solutions ultimedia Kiosks, Totems & Multi-Touch Tables NOVO creates Multimedia Kiosks, Totems and Multi-Touch Tables which are both attractive and minimalistic in form. The basis of the design process is the analysis of the context in which our products will be found and a reference to the architectural details, colours and textures used in the facility. We create products that complement the interiors created by architects and designers. The company also provides custom solutions for events, exhibitions, festivals, and promotional campaigns. Kiosks and Totems can be equipped with touch screens, barcode readers, printers, cameras, speakers and mobile charging ports, able to perform various functions – information, navigation, advertising and lottery. Depending on the specification requirements of the event, we can develop the appropriate software applications, provide technical assistance, and personalise kiosks in accordance with the client’s brand guidelines.

Digital Signage Solutions “The importance of Digital Signage in today’s world is growing rapidly. LED Screen Displays, Multimedia kiosks and Totems are some of the main elements of new commercial and public areas, and constitute an integral part of the arrangement of the entire space, be it indoors or outdoors. Designing these types of devices from scratch, taking into account the project brief and target user audience, is our main practice.” – Andrea Selvaggi, Managing Director, NOVO Limited. Digital LED Screen Displays LED Screens and LED Video Wall Displays are new alternatives to the traditional communication platforms which allow content to remain fresh and dynamic. The perception or view of a client’s brand image is imperative, and this technology gives them the opportunity to raise awareness of their products and engage their audience in an eye-catching manner. Sales Enquiries: T: 9945 2279; E: info@novo.com.mt; www.novo.com.mt; Facebook.com/novodigitalsignage

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New appointments at ARQ as company takes on new corporate identity

RQ Group underwent a rebrand in 2019 that saw the launch of a fresh, new corporate identity.

“At ARQ Group, we take a 360-degree view. ARQ integrates professionals from different disciplines – lawyers, compliance professionals, accountants, tax specialists and economists – depending on the project at hand,” states Manfred Galdes, Managing Partner. The core offering of corporate and private client advisory services that includes accounting, tax, fiduciary and risk, and compliance services has evolved to incorporate new related service divisions. With the recent appointment of Jonathan Cassano, the in-house IT department has been extended into an IT Technology client resource centre embracing the latest technological advances and trends. Also new to ARQ is the expansion of the Economic Business Intelligence division with the appointment of two new senior managers. Daniel Attard joins ARQ as the Senior Manager of financial services to focus on regulatory advisory services, compliance reviews and assistance with licence applications. Glenn Fenech simultaneously joins ARQ as the Senior Manager of economic and business intelligence, focused on project-based, policy

and regulatory advisory economic intelligence and strategy. The company also recently appointed Lewis Baldacchino as the new Chief Financial and Operations Officer to lead the business strategy and growth, as well as Ramona Galea in the capacity of HR Senior Manager. The company takes pride in attracting and securing top talent with both local and international exposure. “Our greatest asset – and investment – is in our team of 100 staff members,” concludes ARQ Partner, David Borg.

Bringing Talent Together: Team ARQ on the terrace at the office in Birkirkara

The benefits of ride-hailing over private car usage

ide-hailing is being considered as the modernisation of the traditional chauffeur driven taxi service. Through ride-hailing, customers are able to hail vehicles, view drivers and consider prices beforehand, conveniently done through the simplicity of a single downloadable application.

Taking Malta into consideration, the majority of the population on the island owns and maintains private vehicles. An argument can be made that this is mostly due to the limited route reach of the public transport services, as well as of course personal convenience. Ride-hailing, although relatively new, has become an increasingly popular niche in Malta. Much of its popularity stems from three highly sought-after fundamental factors: it’s safe, economic and accessible. Through these crucial attributes, ride-hailing companies like iGO offer their customers excellent transport alternatives. The use of a ride-hailing service helps lift constraints on an enjoyable night out, where the transportation service becomes the night’s designated driver, providing customers with trained drivers, whose visible user rating is on display, guaranteeing their professional service

at all times. Ride-hailing also offers fantastic job opportunities for enterprising drivers looking for fulltime or part-time employment. Worldwide, the ride-hailing phenomenon is also quickly changing the population’s mind-set. For many individuals, the daunting prospect of financing a vehicle, through its yearly expenses and maintenance, has become a questionable endeavour. While constant improvements and maintenance are always being done on their systems, customers are currently using the service to effectively hail a ride and arrive at their destination within minutes, without the worry of parking or the troubles of driving.

Visit www.igo.mt for more information

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Vision 2021: Securing a prosperous future for Malta in

esports and video game development MALTA’S ESPORTS INDUSTRY IS ON AN UPWARD TRAJECTORY, AND THE RECENT LAUNCH OF GOVERNMENT’S VISION FOR VIDEO GAME DEVELOPMENT AND ESPORTS (VISION 2021) AIMS TO FURTHER LEGITIMISE THIS BOOMING GLOBAL INDUSTRY AT A LOCAL LEVEL. TIMOTHY VELLA SPEAKS TO INDUSTRY INSIDERS FOR THE LATEST DEVELOPMENTS IN THE SECTOR AND THE EXECUTION OF VISION 2021. he Maltese Government has, over the past few months, set the ball rolling to turn Malta into a central European hub for the video game industry. With the implementation of its Vision for Video Game Development and esports (Vision 2021), launched last May, Government aims to provide support to a budding industry with an enormous base of young and loyal participants and fans.

Parliamentary Secretary for Financial Services, Digital Economy and Innovation, Silvio Schembri, has been at the forefront of this movement and spearheaded Malta’s status as one of the world’s leading, emerging technology jurisdictions. “Our vision for the video gaming development sector is to see it grow from 0.1 per cent to 1 per cent of our GDP in the next 10 years,” he stated in a recent press release. 123

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Currently, Malta is home to 15 game development studios which employ more than 200 people. And numbers are set to grow as, according to Mr Schembri, “it is Government’s commitment to push this industry and Malta’s name further to the forefront. As a Government, we are fully committed to see this industry thrive, presented as a pathway for future generations to pursue a career in this sector and see it fully incorporated into our already strong ecosystem.” The generation of people who grew up with video games has now evolved into a workforce, whose perception of video games has simultaneously evolved from that of simple amusement to a sport, solidified by recognition from the International Olympic Committee in 2017. The monetisation of this sport has led to its potential transforming into a significant share of the worldwide sports market, expected to be worth close to €1 billion in 2019, according to global games and esports analytics firm, Newzoo.

Malta held two top esports events in 2018, and we see huge potential in game development and production. Our vision is to directly generate 2,200 to 3,000 fulltime employment positions over the next 10 years in the sector. Ivan Filletti, Head of Operations and Business Development, GamingMalta

Simon Theuma, the CEO at Eden Sports, has witnessed the changes to the video gaming scene firsthand, and has had a hand in helping to shift the perception. “Gaming is no longer that thing you do in the basement,” he jokes. “Mainstream successes in the gaming world keep getting bigger and bigger, and the next big thing is happening sooner rather than later.” The shift in attitude has led to a structured gaming scene, meaning that now more than ever, people who compete in esports are aware that there is a chance of prospering from a lucrative career. “It’s no

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longer just about proving you’re the best among friends,” he asserts. “There’s more on the line, and as our customers’ expectations increase, we’re only too happy to deliver.” Speaking about shifts in attitudes, he notes that the most significant change he has witnessed has been parents’ attitudes. “They’re waking up to the reality that games are no longer a waste of time. It’s not just about the playing aspect; there’s a much bigger industry out there – broadcasting and media, event production, betting, and that’s only scratching the surface.” Since hosting their €135k ($150k) pro CounterStrike tournament last December, Eden Sports have hosted some of the best Counter-Strike teams in the world for bootcamps at the InterContinental Malta, establishing themselves on the international stage. In fact, Team Liquid, the world’s number one squad, came over to participate twice. “Knowing how much effort and thought GamingMalta, and by extension the Government, is putting into Vision 2021, I foresee great things in the future,” he says. “The world has seen Malta’s esports potential,

and now everyone wants to get in on the action, and stick around once they’re in.” Given its recent emergence as an industry, there are endless ways of creating value. “As a country, we’re trying to develop as much of that as we can and cement ourselves as the esports island.” Mr Theuma adds that while major strides have been made, there can never be too much awareness. “An esports audience is an engaged, intelligent and affluent one. For a long time, the esports industry was driven by passion, with little regard for profit. Although that passion is still alive and well, the profitability aspect has rightly become an important part of any esports business, especially with the involvement of external investors and governments to help things grow. The scales of demand are definitely going to tip at some point, and with the way esports is evolving, it’s more a question of when rather than if.” 127

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Ivan Filletti, Head of Operations and Business Development at GamingMalta – a non-profit foundation set up by the Maltese Government and the Malta Gaming Authority, tasked with promoting Malta as a centre of excellence in the digital and remote gaming sector globally – shares Mr Theuma’s enthusiasm. His objective is to position Malta as the home of gaming excellence while working in tandem with the iGaming sector. “The Government’s Vision 2021 is a clear message that shows how the country and policy-makers have embraced this sector and plan on organising it in a structured manner,” he says. “On the day Government announced its plans,” he continues, “we also signed a Memorandum Of Understanding with ESLGaming, the world’s largest esports tournament organisation. We firmly believe Malta has all the right credentials to become an esports hub.” esports has become a global spectator sport, with nearly 300 million occasional viewers and esports enthusiasts worldwide, he explains. “Malta held two top esports events in 2018, and we see huge potential in game development and production. Our vision is to directly generate 2,200 to 3,000 full-time employment positions over the next 10 years in the sector and establish an incubator for video game and esports development start-ups within GamingMalta.” Mr Filletti adds that Malta already has a strong iGaming ecosystem, “and both industries can leverage the business potential and opportunities. By taking advantage of our advanced IT infrastructure, as well as our status as a popular tourist destination, an ever-growing esports community would find a welcoming home here.” The online gaming sector sees potential in contributing to the esports sector from a betting perspective, an area Malta has excelled in. “Ultimately, it’s all about recognising the separate components and joining them together. We’re here to harness all aspects simultaneously, while ensuring that the ship is steered in the right direction.”

It’s not just about the playing aspect; there’s a much bigger industry out there – broadcasting and media, event production, betting, and that’s only scratching the surface. Simon Theuma, CEO, Eden Sports

It’s easy to get carried away with the almost limitless potential. However, Mr Filletti assures that his feet are firmly planted on the ground. “We have to remain humble and understand that we are on a continuous learning process. We have the obligation to listen to the key stakeholders in the sector, people whose experience we can draw from, in order to have a strong foundation on which to build a successful future.”

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The global video game industry alone was worth more than €122 billion ($135 billion) in 2018 – that’s more than the film and music industries combined. As a result of such high demand, it has become a key driver of technology development in relevant sectors, from the speed of chip processing, to screen resolution and internet connectivity. “The scale of opportunities for both the creative and tech sectors as a result of new technologies is enormous,” he adds. Currently, the potential for technological convergence is truly apparent. “With Malta’s extensive regulatory framework as well as its position at the forefront of blockchain innovation, we can add increased value to the video games sector to improve underlying technology and revenue systems,” he states.

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Parliamentary Secretary Silvio Schembri recently launched Malta’s first video game and esports summit and expo – Playcon, organised by stakeholders in the sector, which will complement the DELTA Summit and Malta Tech Week. Held between 3rd and 6th October at MFCC in Ta’ Qali, highlights include a thought leadership summit and game consumer experiences, and it is envisaged to become a staple event in the video game development and esports sector. Malta has made great strides in the DLT sector, but that is just the tip of the iceberg. With the upcoming plans for video game development and esports, and future plans related to AI and Big Data, Malta is well on its way to establishing itself as the jurisdiction at the very forefront of pioneering technologies.