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As the EU introduces MiCA, PSD3, and the FIDA framework, this insight examines the need for a principle-based regulatory approach that prioritises trust, consumer protection, and market integrity. It highlights the risks of regulatory fragmentation and outlines how Grant Thornton Malta helps clients adapt and innovate within this evolving landscape.

Embracing the digital revolution in Malta

The evolution of corporate finance and digital economy

Governments and tax authorities are scrambling to keep pace with the increasing digitisation of the global economy and public outcry over the levels of corporate tax being paid by large multinational enterprises.

In June 2019, the Financial Action Task Force (FATF) established various rules to combat the misuse of virtual assets for the purpose of money laundering and financing of terrorism. The funds travel rule featured in the FATF’s recommendations as well as it requires Virtual Asset Service Providers (‘VASPs’) to collate and share information about the sender (originator) and receiver (beneficiary) whilst undertaking a transaction.

The European Banking Authority (EBA) has published the findings of a consultation held with the supervisory authorities, industry stakeholders and the EBA Fintech Knowledge Hub, to assess the impact of Fintech on business payment institutions (PIs), and electronic money institutions (EMIs). The scope of the EBA’s report is to document the ongoing changes in the industry and educate regulating institutions, supervisors, and the stakeholders. As detailed in the report, the payment industry transformation is being dramatically accelerated by the following factors:

Technology is rapidly evolving, and this is proven with the development of blockchain technology, cryptocurrencies and other virtual assets. Concurrently, criminals are also advancing in terms of technology use since traditional crimes such as money laundering, theft, drug trafficking and financing of terrorism are being shifted to the cyber world.

A study published by the European Parliamentary Research Service (EPRS) seeks to examine whether the European Data Protection Regulation and the ancillary framework (GDPR) can coexist with the peculiar nature of blockchain technologies. The study argues that the multiple points of friction which have emerged between the GDPR and blockchain technologies are mainly due to three factors:

The quest for digitisation may be deemed elusive by some, however in switching from postal mail to fax and eventually to email, from paper-ledger to spreadsheet or even to fully fledged process automation, the road to digitisation has already been embarked upon by organisations. Staying ahead of the competition, however, is not about the technology itself, but a matter of strategy.

Malta has led the way in the regulation of the application of distributed ledger technology (DLT), including blockchain, to the financial world, paving the way for the issuers of DLT and digital assets as well as firms dealing with such digital assets.

We all heard about “big data”; which is incomprehensibly large data generated by real people. To give you an idea of scale; 90% of all data was created in the last 2 years, and we currently generate c. 2.5 quintillion bytes of data a day.

Big data analytics refers to the possibility of gathering and analysing a substantial amount of data through advanced Business Intelligence (BI) software systems.

On 25 January the Malta Financial Services Authority issued an update on the Virtual Financial Assets Framework to update the public on the progress of the implementation of the regulatory framework.

The Malta Financial Services Authority has recently launched a consultation paper highlighting its vision for the coming years. Labelled as MFSA's Vision 2021 it outlines the authority’s aim to strengthen its processes and paving the way for the future of the financial services industry. Concurrently, the MFSA also launched a consultation document on the MFSA's FinTech strategy, proposing the introduction of a regulatory sandbox and innovation hub.

Progress in finance has facilitated the exchange of value to an automated process, but behind the scenes it has been a centuries’ long process to get where we are today.

Many predict that DLT is reinventing and transforming key industries and creating new business models, making every transaction transparent, democratic, decentralized, efficient and secure. The belief in blockchain’s potential is so widespread that financial and tech entities have invested an estimate of $1.4 billion in 2016, which is expected to go up to $2.1 billion in 2018.