Keeping Up with KSi Malta

KSi MALTA IS A CORPORATE AND PRIVATE CLIENT ADVISORY, ACCOUNTING, AUDIT AND TAX FIRM PROVIDING A FULL RANGE OF FINANCIAL, LEGAL, AND BUSINESS ADVISORY SERVICES TO A DIVERSIFIED CLIENT BASE. BENJAMIN GRISCTI (DIRECTOR – TAX), DANIEL BILOCCA (HEAD OF RISK AND COMPLIANCE) AND DR JOSEF CACHIA (HEAD OF LEGAL) TALK TO THE BLOCK IN AN EXCLUSIVE INTERVIEW.

YOU CURRENTLY RUN A BLOCKCHAIN ADVISORY SERVICES, CAN YOU ELABORATE ON SOME OF THE BENEFITS THIS OFFERS YOUR CLIENTS?

Upon the publication of Malta’s DLT regulatory framework we have moved on to settingup our fintech arm specifically aimed at offering legal and corporate assistance to the cryptocurrencies stakeholders. While we generally do not assist with the technological aspects, we consider ourselves a one-stopshop solution for customers seeking the necessary legal, corporate and tax advice for carrying out an ICO, or anyone interested in offering cryptocurrency-related services.

WHAT IN YOUR OPINION IS THE BIGGEST BARRIER TO THE SUCCESSFUL IMPLEMENTATION OF MASS CRYPTOCURRENCY ADOPTION?

We would say stereotyping and market volatility, because let’s face it, the majority of people still trust fiat currencies more than cryptocurrency. Fiat currency has been around for too long to be replaced by a new means of payment, let alone by a volatile one. The counter argument would be that volatility is probably being caused by such stereotyping because cryptocurrencies are still sought by a comparatively small number of people, resulting in prices swinging much faster depending on sentiment and fear.

With increased awareness and the new generation seemingly willing to try something new, we believe that an increased adoption of cryptocurrency could be nearby.

ITALY RECENTLY APPROVED THE SIMPLIFICATION DECREE, WHICH WILL ACKNOWLEDGE SMART CONTRACTS IN THE DIGITAL FORMAT AS BEING EQUAL TO CONTRACTS IN WRITING. WHAT IS YOUR OPINION ON THIS?

Smart contracts are generally taunted to be one of the key benefits of blockchain technology. The potential main traits of smart contracts are the possibility of automatic execution and their versatility due to being usable in almost every sector. Realistically speaking, no matter how good at drafting a written contract a lawyer is, there is no way how one could go a step further and come up with a written contract which does not only encompass the rules, but enforces them – only a smart contract could achieve that. Gartner, one of the world’s leading research and advisory companies in fact estimates that by 2022, 25% of the world’s organisations will be using smart contracts – and this is just 3 years down the line!

While it is clear to the naked eye that there are still considerable security, coding, and privacy issues which are to be improved, well-coded smart contracts have an edge over traditional written contracts when it comes to trust, autonomy and efficiency. One of the main challenges however would be how to deal with smart contract errors.

WHAT MAKES MALTA SUCH A HAVEN FOR BLOCKCHAIN AND FINTECH COMPANIES LOOKING TO SET UP SHOP HERE?

Malta’s game plan has been different from other countries. This is mainly due to the fact that we are not only seeking to attract ICOs, but our legal framework aims to cover most of the typical players of the blockchain and cryptocurrency world. Therefore, even if your intention is to issue an ICO, an STO or simply launch an exchange platform, doing it through Malta would automatically introduce you to all subject matter experts, leading market players, and professionals you may need - all working within a regulated, trusted and comprehensive ecosystem. The Maltese legislator has attempted to build on an already tried-and-tested regulatory legislation to create a new platform of regulation for a new section of technology which has the potential to affect our financial systems and the way we do business.

WHAT’S THE NEXT STEP FOR MALTA IN TERMS OF REGULATION AND LEGISLATION?

In recent days the MFSA has issued the third rule book dealing with virtual financial assets service providers such as custodians and exchanges – with this in hand we now have a complete legal package for DLT and virtual financial assets. Following the publication of the Maltese government’s vision on Artificial Intelligence and the Malta Financial Service Authority’s fintech strategy, we are now also eagerly awaiting a legislative framework on this concept. The government’s plan is to mirror the approach taken for DLT space and to position Malta amongst the top 10 countries in the world with an Artificial Intelligence Policy.

We also hope that in the near future there will be legal clarity with regards to Security Token Offerings (STOs). With these seemingly becoming very popular, one also expects Malta to be improving its legislative framework specifically for this purpose.

BITCOIN BILLIONAIRE INVESTOR TIM DRAPER RECENTLY GAVE AN INTERVIEW WHERE HE SAID THAT AS CRYPTO BECOMES MORE WIDESPREAD, THE ONLY PEOPLE USING FIAT CURRENCIES IN 5 YEARS TIME WILL BE CRIMINALS – WHAT IS YOUR POSITION ON THIS, DO YOU AGREE WITH HIM?

Let’s face it – fiat currencies have been around for a thousand years, while cryptocurrencies are still in their infancy, so five years could be a bit of a long shot. Even for fiat currency, global mass adoption took a further 500 years. Having said that, globalisation can certainly accelerate mass adoption. Arguably, at one point in the nearby future, we can anticipate that society at large will catch up with disruptive technologies and their applications, including cryptocurrencies, and there should definitely be a shift in mind-set of stakeholders and modus operandi of corporates.