HYPER AUTHORITY: MALTA’S RISE ABOVE VIRTUAL ASSET VALIDATION – BY SHADOWBOX MVMNT
Like many innovators as of the moment, we are routinely “catapulted” into action by the adoption of Blockchain technology, and the rapidly evolving landscape surrounding the development of virtual assets. Yet, our mission to build an online community that is socially and economically groundbreaking, is coming together in the precise manner we hoped for, nearly seven years ago to date. Moving into Beta Development (Version 3.1), of our shared marketplace and tokenized asset, we will utilize Ethereum and Blockchain as the integrated circuit for facilitating a collaborative community and currency, geared (not limited) to:
- Empower Artists
- Digitize Music Rights and Metadata on Behalf of our Contributors
- Share Information in an Open Environment
- Enable “Select” Entities to License Catalogs and Pay Artists Directly
- Raise & Refine the Lives of Artists and Fans through Events and Experiences Rooted in
In an upcoming article, we discuss the potential for Ethereum (and Content under Terms of Distribution) to operate sufficiently as a commodity (and equally touch on the concept of “Content Backed” Commodities). What is also mentioned, is that our Token – Ticker Symbol: SHBOX / ETH – (and our revised digital marketplace/distribution platform for independent artists building out on Blockchain) can truly enhance (if not mirror) our original blueprints and operating models perfectly. Over the past 2-4 years we have encountered newfound potential to:
- Scale Through Measures in Social/Active Audience (in Conjunction With Sale/Price Points),
- Generate “Backing” & Economic Reinforcement by Analytical/Artificially Intelligence (Based)
Yields & Metrics
With this style of intent, comes a great level of commitment, compliance, and a clear sense of comprehension per all regulatory measures in play. In our case, this not only includes the sincere desire and dream to work side by side with the likes of the IRS, SEC, and Federal Reserve one day; our dedication equally incorporates the appropriate licensure from the Malta Financial Services Authority (MSFA), since 101% validation as a Crypto/Blockchain based venture and corporate entity in Malta is one of our operative goals……now that we are past the ICO Hype of 2017-18, and on to conducting real business and economic uplift.
Malta, is a tiny island in the middle of the Mediterranean, (FYI: The astounding beauty and culture will be displayed in Part 3 of our Malta Series) and since 2018, we officially started our own agenda to set up a complimentary operation there. It’s well known that many Cryptocurrency startups and exchanges like Okex, Bitbay, Binance, Bittrex, and Zebpay, have extended their operations to Malta. Now, whether it’s to escape “select” and/or “stricter” regulatory jurisdictions; or simply to set up shop in what’s been rumored to be a crypto-driven “Blockchain Island” of sorts; incorporating a business in Malta is a very serious initiative, and we are taking a very serious approach. With total apprehension that banks and regulators will constantly update their policies and procedures surrounding Cryptocurrency, (which every Entrepreneur in this market space should anticipate from all financial institutions – post ICO Boom 2017-2018); taking all of the necessary steps (not specific to an extremely high-profile island that has been overly speculated for all of the right reasons) is important to the growth process of my venture. If handled and planned correctly, I believe the reward of owning an operative piece of presence in Malta is everlasting, and worth the steps it would take to make that happen.
Trying our best to permit enthusiasm to win over stress in these intense growth phases, we do our best to remain grounded, while avoiding the gravitation to extravagant promotion of any nature. While I hear the shouting over crypto’s demise due to illegitimacy in one corner, around the block I’m reading that Commodity Futures Trading Commission (“CFTC”) Chairman, Heath Tarbert, has officially announced his belief in Ether (the Number #2 Cryptocurrency behind Bitcoin) representing a Commodity that could be positioned under the jurisdiction of the CFTC at some point in the near future. And as stringent as matters will get, after understanding the stipulations on all sides, (See “Regulation” Section); it’s in my opinion that what’s truly critical at the end of the day, is your 1.) Business Model; and 2.) Intentions you have with your expansion onto this island. Equally important going forward, are the communal attempts to better translate the variation and variance between Blockchain mechanics and Cryptocurrency mechanics; in an effort to instill a stronger understanding of the industry as a whole. In all respects, we conclude this section by stating that we’re extremely confident in the Maltese Parliament; and the direction/position they’re taking/holding in the swiftly evolving digital economy. Our visit to their University was a testament to the course of orientation and “Commitment“ we speak of.
While visiting the University of Malta for the first time, I stepped to a college campus like no other. Summer session and 105 degree breezes dictated a warm, calm, and focused environment. Yet, the vibe was still strikingly vibrant with newfound knowledge fostered through their Summer curriculum; and peacefully very loud due to the continuous development and construction on their new Technology Center. After engaging members of the general student body, talking with select computer science majors, and learning more about the mission and vision behind their syllabus, modules, and faculty body, I was happy with the decision to start this phase of research and development, right at the point of training and education. It was an amazing experience to say the least. When departing the campus at the end of my visit, I hadn’t even crossed the street before realizing that this first engagement, was something special. Every piece of information I received on this campus, candidly validated every notion, regarding Malta’s dedication to playing an active role in shaping the regulations around Blockchain Technology and Cryptocurrency transactions, and they’re doing it in the most sophisticated and philosophical nature possible.
The new construction on campus is related to the island of Malta, and their recognition of the need to introduce graduate and post graduate curriculum and programs, that are focused on a Blockchain, Distributed Ledger Technologies, and Virtual Asset Management. Their multi- disciplinary approach is geared to recruit students and/or professionals focused on ICT (Information Communications and Technology), Business, and/or Law, and provides for all of the necessary disciplines (and practicum) relevant to running a company that has Crypto/ Blockchain at the center point of its operation and regulatory practices. This academic institution is clearly passionate about Blockchain and Distributed Ledger Technologies (DLT), and the potential at hand, to alter various services and applications. I have the utmost respect for the University, as they’re now stamped as one of the academic pioneers engaging the pedagogical and educational provocations that are integrated with the advancements of this new technological development and alternative financial systems. Their strategy exists within a multi-disciplinary approach to weaving a blanket, that is to be threaded in:
- Information & Communications Technology
- Legal Affairs & Regulation
- Business Management
as the furnishing of smart contracts is clouding up the vision when scrutinizing “Actual Legal Contracts” vs. “Automated Execution (& Engineering) of Legal Obligations”. These three disciplines (threads) remain at the core of decentralization mechanisms and computational execution and constructed on Computer Science and ICT principles. And with the rise of new mechanisms, comes the economic adoption of new financial and business models; which are now further enhanced by open source communities and artificial intelligence, The University, seems to be designing curriculum that earnestly appreciates the root of the:
- Technical Processes
- Framework of Legal Infrastructure
through the emergence of Cryptocurrencies, that are built on Blockchain and DLTsSoftware. I state theses words with the highest respect. This institution proved their dedication, to tackling the educational dares and provocations ingrained within an interdisciplinary field of this manner. They respect that Malta, as their home, is working hard towards becoming a reputable influencer in the Crypto, Blockchain, and DLT industry/space; and that an achievement of this nature will require authoritative specialists whom are cross-trained to submerge into the symbiotic methodologies and modes, by which accompany Blockchain Technology and DLT.
On a conquest to engage and understand as much as much as possible, from the point of scholastic and vocational instruction, it was on to the next set of destinations that would permit us to gain “real-time” knowledge surrounding the “Authority” and “Governance” superintending the advancement of Virtual Asset Management, Crypto Exchange and Distribution, and the Initial Offerings of Tokens and/or Exchanges heading into markets (Malta, EU, and Global) via 2020 and beyond. (Please Note: Pertinent information, relative to: Acts, Laws, and/or Services regarding primary authority and regulation is listed in this section and through the provided links). Here are some groups to become familiar with:
(MDIA) is the primary “Authority” responsible for elevating all governmental policies that promote Malta as the “Centre for Excellence for Technological Innovation”, while establishing and executing caliber that ensures compliance with any (and all) international obligations. The Authority is in place to protect and support all users, but we learned that they also work hard to inspire (and accommodate) various formats of innovation. They allow for “maximum flexibility” when it comes to the certification of “Innovative Technology Arrangements”. Please see (ITAS)
(ITAS) Innovative Technology Arrangements and Services Act: “Through the Innovative Technology Arrangements and Services Act (ITAS), regulation will be provided for innovative technology arrangements (ITAs) and designated innovative technology services providers (ITSPs). An ACT to provide for the regulation of designated innovative technology arrangements referred to in the Act, as well as of designated innovative technology services referred to in the Act, and for the exercise by or on behalf of the Malta Digital Innovation Authority of regulatory functions with regard thereto”.
(VFA) The Virtual Financial Assets Act, 2018 (The VFA Act), “sets out to regulate the field of Initial Virtual Financial Asset Offerings and Virtual Financial Assets and to make provision for matters ancillary or incidental thereto or connected therewith. Under the definitions of the Act, a cryptocurrency may be classed as a Virtual Financial Asset (VFA) and the Act provides a comprehensive set of rules that will both protect consumers and support the growth of the industry and its stakeholders“. The Act details the rigorous and rigid requirements for entrepreneurs and ventures launching cryptocurrencies. The Act also oversees:
- Portfolio Managers
- Custodian/Nominee Service Providers
- eWallet Providers
- Investment Advisors
(MFSA) The Malta Financial Services Authority is the solitary supervisor of Financial Services in Malta. The MFSA regulates:
- Financial Institutions
- Payment Institutions
- Insurance Companies & Intermediaries
- Investment Services Companies
- Collective Investment Schemes
- Securities Markets
- Recognized Investment Exchanges
- Trust Management Companies
- Company Services Providers
- Pension Schemes
As of 2018, they have become responsible for regulating Virtual Financial Assets. The MFSA, whom holds an advisory role with the Government, was set up through an Act of Parliament (Chapter 330 of the Laws of Malta) and its main tasks include:
- The Protection of Consumers
- Maintaining Integrity of Financial Markets
- Assurance of Financial Stability
- Supervision of all Financial Services Activities
For ventures and entrepreneurs in the Cryptocurrency space, that are aspiring to enter Malta, we feel it’s imperative to gain familiarity with the MFSA, as financial institutions like banks, will most likely require all Cryptocurrency operators to obtain a license with the Malta Financial Services Authority (MFSA) before starting up their operations. This mandate was indeed confirmed by the Parliamentary Secretary for Financial Services, Silvio Schembri, and should be treated with the highest level of consideration. We were informed that Malta has an additional “Bill” in the making, and at the cornerstone is the creation of:
- Innovative Technology Foundations
- Complete Legal Structure for Technology Arrangements,
- Complete Conception and Cognition Relevant to Legal Liabilities Related to Distributed Ledger Systems (as applicable).
We will conclude this section by re-stating the importance of not only your business model, yet also the collective need for the distinction (and correlation) between Blockchain and Cryptocurrency, to become globally understood and appreciated. Emanuel Pulis, is a CEO who has produced three major conferences in Malta (focused on iGaming, Artificial Intelligence, and Blockchain). news.Bitcoin.com released a statement from Mr. Pulis that explained the nature of banks being “fine” with opening bank accounts for Blockchain operators, but less likely for operations in Cryptocurrency (particularly those waiting for the MFSA licenses to be granted). On the contrary, Mr. Pulis did note that the future “seems bright with other private banking initiatives that are currently being reviewed by MFSA”. Preparation is money.
This section pertains to Initial Offerings (ICO and/or IEO) for Tokens and Exchanges in the Jurisdiction of Malta. Recently, I attended a roundtable discussion at the Angel List office in homebase San Francisco, CA, that was spearheaded by Coinlist (and their BuildingBlocks* initiative that is assisting digital finance entrepreneurs with a support system centralized around Token Economics, Node Operation, Talent Hiring, and so forth). This event curated the likes of professionals (Senior Managers/Engineers) whom are essentially running some of the largest projects in the “Crypto” space right now. Chief Representatives from Edgeware, Enigma, Numerai, and Reserve were present to discuss their own experiences in the virtual asset space thus far, including an in depth overview of the ICO and/or IEO process firsthand. The engagement vocalized various strategies and tactics pertaining to Token Sales and Distribution (from ICOs to IEO’s); and offered valuable insight on the steps and affairs present from the Token “Airdrop” to the Token “Lockdrop”, by which are up and coming methods to distribute your initial tokens to various parties. Kindred to my departure from the University, before I could leave the building and step to Gold Street, I was perplexed to say the least, striving to fathom the amount of intelligence (natural to artificial) exchanged through this gathering, which led me to digest the certainty that the ICO (Initial Coin Offering) and/or the IEO (Initial Exchange Offering), are financial instruments that stand more prevalent than ever.
Since the death of “Crowdfunding”, my belief is that new formulas for “Crowd Capitalizing” will stand the test of economic and regulatory augmentation, as long as they are constructed and constituted correctly from the point of entry to the point of completion; and are regulated accordingly with all of the necessary positions of authority in each operating jurisdiction (as applicable). We want to thank Angel List for hosting this event, and Coinlist/BuidlingBlocks for keeping a strict focus on the provocations and tests facing Founders (and teams) like myself; whom are building operations based on Blockchain Technology and Cryptocurrency, and value the process of due diligence. And while the infrastructure per a traditional Initial Offering (ICO, IEO) still remains, let’s agree that new protocols have been put into place, and we offer investors and potential holders fresh, innovative, and different structures per the offering and involvement with our Tokens, (Please Note: all of which will require the help of an Attorney at every point).
2017 witnessed ICOs raise billions of dollars, leading it to become one of the most disruptive methods of raising capital to date. And yes, those times are long gone and many lessons were learned, yet the principals and potential will continue to prevail and prove in my eyes. As we move on, we speak again in “real time” about the destination of Malta, as I believe the philosophies and fundamental nature of knowledge surrounding this overload of speculation will stand to assure that this little island is the place to be when launching certain kinds of businesses. From here I state that the sum of my reasoning essentially derives from the fact that Malta, is the first country in the world to introduce a clear regulatory framework around ICOs (Initial Coin Offerings), Tokens and Cryptocurrencies, and are actively implementing rules and regulations to foster:
- Reputation & Stature
- Effective Tax Structures
- Workforce Talent
The island equally offers a variety of incentives to facilitate the process per Blockchain companies moving to Malta including:
- Capital Contributions: They Will Match the Capital You Inject
- Assistance With Regards to Staff Salaries.
- Office Space
- Tax Credits
My rationale proceeds from my role as a Founder, whom is especially attracted to this environment, simply because I feel that my (or somebody else’s) initiatives with Cryptocurrency and Blockchain, would organically obtain the certainty of attention by the appropriate authorities (mentioned above); and the prospective support of the island’s prominent University by which is on the intellectual forefront of the industry my business is organically transforming into. Competitive advantages over offshore vs. onshore jurisdictions will continue to evolve, yet the framework of the jurisdiction is critical in our eyes. I feel that if a society is properly conducted to attribute value to virtual currencies, by routinely asserting and alleging that the value of societal interaction actually exists (as Malta does), a professional landscape with great promise and potential will naturally (and economically) mature over time.
Back in 2017, Joseph Muscat, the Prime Minister officially declared and endorsed national action plan intended to support the Cryptocurrency Bitcoin and Blockchain Technology. It’s been noted that he addressed the capabilities of Bitcoin and Blockchain to handle, store, and process sensitive data in a decentralized ecosystem that is fixed, rigid, and established appropriately. The Prime Minister displayed his confidence and conviction, per the notion of cryptocurrency becoming the “future money”. As mentioned throughout this piece, the token market we saw in 2017, is not the token market we operate under now, yet the worth is still here, and instruments like Initial Coin Offerings actually have the ability to go beyond 2017, into future money as the Prime Minister mentioned. Since 2017, Malta has started establishing new regulations, and have made significant efforts to network with Crypto groups to ensure it’s supportive. Since 2017, what has been witnessed a lot of omission and oversight in regards newfound pecuniary resources that were misused beyond reason, examples include use of alternative financial supplies by terrorist groups and fraud issues pertains to transactions executed on anonymous pre-paid cards.
Again, just like establishing the variation and distinction between professional Cryptocurrency and Blockchain outfits, its equally important to better address all of the misconceptions, differences and gaps in the most efficient manner possible. In an effort to avoid unwarranted obstacles to forward thinking payment gateways and new financial markets, we must find the equilibrium between the:
- Need To Increase Security
- Need To Protect Fundamental Rights While Assuring the Presence of Data Protection and Economic Freedoms.
Over and above Blockchain, Malta is already a flourishing as an iGaming destination, and now has a promising presence of live music (Details forthcoming in Part 2). Malta is involving itself in becoming captivated in particular markets including “Real Estate”, “Gaming and Casinos”, and “Medical Marijuana”. This hub (photograph included in the original article published on shadowboxmvmnt.com) depicts the “General” boom occurring in Malta, housing several companies including CashCow, Gamma Entertainment, & OneOneO:
- Gamma Entertainment, LTD is Officially Registered & Operating Under the Laws of Malta, and Provides: 1.) Online Administrative, Marketing, Customer Care and Secretarial work to Web Based Companies: 2.) Development for Online Content and Design for iGaming companies; and 3.) Risk and Fraud Management Solutions with an Emphasis on Collective Intelligence.
- CashCow is an Award Winning SEO Focused (“Lead Generation”) Digital Company that Launched in Malta during the First Half of 2017, and has Grown from a Cohort of Three Founders, into a Team of More than 15 people, Reaching Diverse Nationalities and Affiliations.
- OneOneO specializes in Luxury Properties
Ian Gauci, is the co-founder of the Malta Blockchain Association, and lectures on Legal Futures and Technology Law at the University of Malta. He has noted that banks in both Malta and abroad are generally “averse” to the risks involved. In Malta’s case, he feels that certain issues have surfaced specifically because as a country, Malta has installed a system of control and command in order to accommodate both Blockchain companies, as well as Cryptocurrency companies. For this one reason alone, the island is attracting large amounts of not only business operators, but business innovators too. Mr. Gauci is also a partner at a Malta-based legal firm GTG Advocates, and serves as an advisor on the Maltese Government’s task force for Blockchain Strategy and Deployment.
On that note, I state that the initial visit to Malta formulated and translated our objectives to provide due diligence procedures that are sufficient, and to distinguish ourselves appropriately, so we clearly convey to the powers that be – how we are using Cryptocurrency and how we are using Blockchain Technology within the operative measures our business beholds and delicately grows with. This entire process, no matter what style of trade, craft, and/or sphere you are in the midst of growing, (in our eyes) it’s best to always begins at the core, where 1.) Education and 2.) Governance are the central point of focus. We wish to thank the island of Malta, the University of Malta, and off of the locals and professionals; for helping us properly navigate and engage these two counterparts effectively, so we can move forward with greater admiration and ambition.
REFERENCES & SOURCES (CURRENTLY UPDATING)
- https://coinlist.co https://www.mfsa.mt
- https://ibcgroup.io/malta/ https://mdia.gov.mt
- Digital Asset Transactions: When Howey Met Gary (Plastic), William H. Hinman, Director,
Division of Corporation Finance, June 14, 2018.
- https://www.sec.gov/news/ speech/speech-hinman-061418
- https://coinlaw.io/maltas-banks-refuse-to-open- accounts-for-crypto-companies/ by Maciek Klimowicz
- https://news.bitcoin.com/malta-might-be-blockchain-island-but-dont-try-opening-a- crypto-
- E&S Group – Specialists in ICO Legal Services, and Crytpo/Blockchain advisory. Based out of
Malta, E&S Group has advised 30 + ICOs to Date. Contact: +356 20103020 and/or email@example.com.
Hyper Authority: Malta’s Rise above Virtual Asset Validation – By John Whitman (SBG/MVMNT)