The enthusiastic promotions of Malta as “blockchain island” may have come and gone, but Economy Minister Silvio Schembri is adamant that blockchain technology has brought –and continues to bring – significant economic benefits to the island.
Pressed to quantify this economic benefit in an interview on Andrew Azzopardi on 103, however, Schembri maintained that it is not a benefit that can be measured easily, describing blockchain as a technology with multiple – and not necessarily direct – benefits.
“Can you describe how much does email contribute to the economy,” the minister retorted by way of example, dismissing Azzopardi’s suggestion that a calculation of this benefit could be made.
Did blockchain help end Malta’s greylisting?
And in Schembri’s view, one notable benefit brought by blockchain technology was an indirect one: its use in Malta’s efforts to overcome its grey-listing – the first for an EU member state – by the Financial Action Task Force.
It did so, he said, through its use by the Malta Business Registry.
Schembri highlighted that one of the FATF’s key sore points concerning Malta’s financial jurisdiction concerned the manner it compiled information on the ultimate beneficial owners of Malta-registered companies: weaknesses in the system raised concerns that such beneficial ownership could be concealed, facilitating financial crimes including money laundering and tax evasion.
But this, the minister continued, was addressed through substantial upgrades at the Malta Business Registry, which recently became the first business registry in the EU to use blockchain technology.
The MBR saw benefits in a technology which permanently stores records and transactions across a distributed virtual space. Any data stored in this manner is immutable and cannot be manipulated and replaced by anyone, which also allows for a more transparent audit trail where necessary.
Malta and the rise of fan tokens
But Schembri also highlighted more direct benefits of the technology in Malta’s tech and financial sector, highlighting one recent example of a more direct economic benefit to the country.
Blockchain is most-commonly associated with cryptocurrencies – whose transactions are recorded on blockchain ledgers – and while Malta had in recent years advertised itself to crypto companies, Schembri held back from making direct mentions of them.
The minister did, however, highlight an associated concept that has taken root over the past couple of years, and in which Malta is playing a key role: “fan tokens” sold by sports clubs to their supporters.
These fan tokens are themselves acquired through crypto-currency – often, but not necessarily, one linked to the club concerned – and the sports clubs often market them as offering buyers real-world perks, including voting rights on certain matters.
And as Schembri pointed out, many of them do so through a Malta-registered company founded in 2018: Socios.
“Today, this is a company worth some €3 billion,” he emphasised.
The practice is not without controversy within the sporting community, and its rooting in cryptocurrency opens it to the speculative practices that have made such currencies highly volatile in recent years. But with many leading football clubs joining the bandwagon, their supporters from across the world are now spending billions on these tokens, with a Malta-based company – using blockchain – at the heart of the practice.
