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Malta’s enthusiastic promotions as a “blockchain island” may have come and gone, but Economy Minister Silvio Schembri is adamant that blockchain technology has brought – and continues to bring. bring – significant economic benefits to the island.

Pressed to quantify this economic benefit in an interview with Andrew Azzopardi on 103, Schembri however argued that it is not an easily measurable benefit, describing blockchain as a technology with multiple – and not necessarily direct – benefits.

“Can you describe how much e-mail contributes to the economy,” retorted the minister by way of example, rejecting Azzopardi’s suggestion that a calculation of this benefit could be made.

Did Blockchain Help End Malta’s Greylisting?

And according to Schembri, a notable benefit brought by blockchain technology was indirect: its use in Malta’s efforts to overcome its gray listing – the first for an EU member state – by the Financial Action Task Force.

It did so, he said, through its use by Malta’s business register.

Schembri pointed out that one of the main pain points of the FATF regarding Malta’s financial jurisdiction was the way it compiled information on the ultimate beneficial owners of companies registered in Malta: weaknesses in the system raised concerns that these beneficial owners could be concealed, facilitating financial crimes, including money laundering and tax evasion.

But that, the minister continued, has been solved by substantial upgrades to Malta’s business register, which recently became the first business register in the EU to use blockchain technology.

MBR saw the benefits of a technology that permanently stores records and transactions in a distributed virtual space. All data stored in this way is immutable and cannot be manipulated and overwritten by anyone, which also allows for a more transparent audit trail if needed.

Malta and the rise of fan tokens

But Schembri also highlighted more direct benefits of technology in Malta’s tech and financial sector, highlighting a recent example of a more direct economic benefit to the country.

Blockchain is most commonly associated with cryptocurrencies – transactions of which are recorded on blockchain ledgers – and while Malta has advertised itself to crypto companies in recent years, Schembri refrained from mentioning them directly. .

The Minister however highlighted a related concept which has taken root over the last two years and in which Malta plays a key role: “fan tokens” sold by sports clubs to their supporters.

These fan tokens are themselves acquired via cryptocurrency – often, but not necessarily, linked to the club concerned – and sports clubs often market them as offering buyers real benefits, including voting rights on certain issues. .

And as Schembri pointed out, many of them do so through a Malta-registered company founded in 2018: Socios.

“Today it is a company worth some 3 billion euros,” he said.

The practice is not without controversy within the sports community, and its entrenchment in cryptocurrency opens it up to the speculative practices that have made these currencies highly volatile in recent years. But with many top football clubs joining the bandwagon, their fans around the world are now spending billions on these tokens, with a Malta-based company – using blockchain – at the heart of the practice.

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