The proliferating use of crypto-assets, especially for trading and investment purposes, has placed pressure on regulators worldwide to enact frameworks under which such activities can be conducted while protecting the users and clients from any malicious or fraudulent acts and practices that may be undertaken by the service providers. Creating an ad-hoc legal framework to regulate these kind of activities and related ones can be quite daunting as a prospect, especially when one considers the novel characteristics of blockchain technology and the way such characteristics alter the nature of the services provided when compared to similar sectors such finance and banking.
BCAS has worked on the renowned DLT Regulatory Framework in Malta, officially launched in November 2018, propelling Malta to the status of one of the leading jurisdictions in terms of crypto-regulatory frameworks. The Maltese DLT Regulatory is unanimously hailed as the most comprehensive of its kind, with a robust licencing regime that has been positively lauded by third country regulatory authorities such as BaFin in Germany. BCAS is also currently engaged with USAID Serbia in order to work on a national blockchain strategy for Serbia, including the creation of a regulatory framework for crypto-assets. BCAS has also briefly worked with the Japanese Financial Services Agency in relation to the Payment Services Act and the inclusion of initial coin offerings therein.
Our team’s significant technical experience in the field of DLT and crypto-assets, coupled with the expertise in relation to frameworks regulating the use and trade of crypto-assets, ensure that any advisory given in relation to frameworks and strategies vis-à-vis DLT are structured in a way that does not inhibit the use and adoption of DLT-based platforms and tools, yet introduces a strong element of legal certainty which is much needed for the effective conduction of business.
A study of the target jurisdiction and its salient characteristics is undertaken prior to any work conducted in relation to the structuring of strategies and frameworks, accompanied by physical visits and meetings with the relevant stakeholders, and followed by an in-depth report outlining the findings of such a study. Following the report, a blueprint for the work to be carried out is structured and agreed upon by the relevant stakeholders, and depending on the requirements of the target jurisdiction, the strategy/framework is formulated accordingly. Through this meticulous approach, BCAS ensures that any developed strategy/framework caters specifically for the jurisdiction in question, addressing the salient needs to be addressed and aiming for the quickest practical implementation possible.
The introduction of blockchain technology has brought about the birth of new assets and services, essentially bringing forth new markets that require regulation and user protection. The regulation of service providers such as exchanges and brokers, as well as adequate frameworks for new assets such as stablecoins are required in order to keep up with the latest developments. There are two main benefits in doing so: protection for investors and users, and a new economic sector to tap into. It is important to ensure that any introduced regulation tackles the right aspects of DLT and its various applications, including crypto-assets, since it is all too easy to either overregulate or underregulate the space, with adverse consequences.