Further to regulating the area of Blockchain, Virtual Currencies and Innovation, apart from the MDIA Bill, the Consultation Document also provides information on the proposed Technology Arrangements Bill (“TAS Bill”) aimed at regulating Technology Arrangements.
Technology Arrangements Bill
The TAS Bill defines Technology Arrangements to capture only Distributed Ledger Technology (“DLT”) Platforms and smart contracts. However, the Government is not excluding the possibility to extend this definition in the future to include other arrangements, such as artificial intelligence.
Any person may request the MDIA to certify a Technology Arrangement, on a voluntary basis. For it to do so, such arrangement must have an Administrator in place who is registered with the MDIA. In certifying a Technology Arrangement, the MDIA will adopt a principles-based review and will assess the arrangement’s compliance, integrity and security. The list of qualities which an arrangement will be required to possess will be formulated by the MDIA once it is established.
This proposed bill will include a provision whereby a contract shall not be considered invalid simply because it is a ‘smart contract’, in the same manner as existing law provides that a contract shall not be considered invalid simply because it is in an electronic format.
Technology Service Providers
The MDIA Bill identifies Service Providers of Technology arrangements as Auditors and Administrators. Auditors of Technology Arrangements are persons who review and assess the Technology Arrangements against number of pre-determined criteria while Administrators manage and control the operation of the Technology Arrangements.
Registration of Service Providers with MDIA is on a voluntary basis and may only be requested by a body corporate or association existing under the laws of Malta, or existing under the laws of another EEA member state if it provides services in Malta. Before granting registration the MDIA will apply the ‘fit and proper’ test on the Service Providers who shall also adhere to certain ongoing requirements.
Service Providers who may seek such registration with the MDIA are those who:
Provide services in relation to any DLT Platform which is certified by MDIA;
Provide services in or from Malta;
Provide services through Maltese legal persons; and
Provide services in such other cases as the Minister may prescribe.
Legal Personality of Technology Arrangements
There may be Technology Arrangements which are not owned by a corporate structure and would not have a proper legal personality. The TAS Bill proposes that such Technology Arrangements may register with the Registrar for Legal Persons in Malta and acquire legal personality upon satisfaction of a number of requirements.