“We aim to be the global trailblazers in the regulation of blockchain-based businesses and the jurisdiction of quality and choice for world class fintech companies,” tweeted the Prime Minister as he welcomed Binance, one of the largest crypto-exchanges in the world to Malta.
Binance’s announced move to Malta has permanently placed the country on the blockchain map for established companies as well as start-ups seeking a crypto-friendly jurisdiction. However, as Malta gears up to embrace the fintech industry, it will also need to address a number of challenges, particularly with respect to human resources in the light of its increasing popularity as a hub for such businesses.
According to a 2016 Executive Opinion Survey, the market perceives that an inadequately educated workforce is the most problematic factor for doing business in Malta, irrespective of the fact that Malta ranks 19th for the quality of its education system and 22nd for the quality of maths and science education out of 138 countries.
In practice, the market is asking for more sophisticated and specialised employees, and unfortunately, this could not be truer in the case of technology-related services. According to economist and JobsPlus chairman Clyde Caruana, only 25 per cent of the 10,000 new jobs created on an annual basis in Malta by the gaming industry go to Maltese nationals.
In our view, there are two solutions to this conundrum that need to be implemented simultaneously in order to ensure that Malta has the right resources to flourish as a fintech jurisdiction. Firstly, it needs to continue promoting IT-oriented careers and to provide adequate training opportunities for Maltese youths and employees to keep abreast of the needs of the industry in terms of resources. It is being said that it may take anywhere from three to 10 years for this industry to become seamlessly integrated as an everyday aspect of our lives, thus the time is ripe to ensure that the Maltese workforce can keep up with the needs of the industry.
Secondly, it needs to hone an environment which attracts not only firms and start-ups, but also foreign blockchain and tech specialists.
While Malta has certainly geared up to take on the industry from a regulatory perspective, Estonia has taken a more hands-on approach to promote a ‘digital society’ through the creation of e-residency. Estonia has effectively digitalised all its public services which citizens and residents can access through their personal secure digital identity. Through this e-id, Estonian citizens and residents can access their data through a decentralised ledger, more commonly known as a blockchain, which allows them to control and assess who can access their data.
Anyone can become an Estonian e-resident for just €100. E-residency makes it easier than ever to set up an Estonian company from anywhere in the world and benefit from the EU internal market freedoms when trading or offering services.
Malta must step up its game to truly foster an ideal environment for businesses and blockchain and technology specialised employees
According to the National Statistics Office, approximately 77 per cent of the Maltese population make regular use of the internet, but only 56.7 per cent of internet users make use of e-Government services.
While Malta will certainly not become a digital society overnight, perhaps we can take inspiration from our European neighbours and adopt aspects of this technology, particularly within our own governmental processes. Indeed, in a recent consultation document the government announced plans to set up the ‘Malta Digital Innovation Authority’ which shall oversee the implementation of innovative technologies to expedite governmental processes.
While the end-user experience should not change with the implementation of blockchain technology since the latter will only replace outdated back-office processes, we believe that nationwide education programmes should be made available for citizens and residents of all ages, thus further closing the technology gap.
While ensuring that the local workforce has the means available to keep up with the needs of the industry is important for any government seeking to establish itself as a fintech hub, the innovative aspect of such technology means that individuals from all over the world will be interested in relocating to jurisdictions where they can grow professionally in their respective field.
Malta is consistently rated as one of the best places to relocate which have already attracted several expats. In the light of all this, Malta does not need to reinvent the wheel when it already has in place residency and citizenship programmes which attract investors, gaming, aviation and financial services executives to our shores. We believe that our residency programmes could be a key pull-factor to attract blockchain and technology specialists from all over the world.
The Residency Programme available for EU/EEA citizens, and the Global Residency Programme and the Malta Residency and Visa Programme available for non-EU/EEA residents offer various advantages to individuals who decide to relocate here. Firstly, Malta is a secure jurisdiction with a high standard of living where English is the language of the administration and is widely spoken by the Maltese. The island vaunts a robust banking system which facilitates the repatriation of money as well.
From a tax perspective, Malta affords the remittance basis of taxation at a flat rate of 15 per cent to individuals who are resident but not domiciled in Malta and hold a qualifying position with companies licenced/recognised by the competent authority. It would be appropriate for such a scheme issued in terms of Legal Notice 106 of 2011 as amended to be extended to attract blockchain and technology specialists through its residency and citizenship programmes.
Individuals relocating to Malta under one of the programmes will benefit from visa-free travel to over 50 countries which includes the Schengen Member States.
Binance’s announced move to Malta will create 200 new jobs, and this is just the beginning. As more and more exchanges and fintech start-ups continue to relocate themselves in Malta, the island must step up its game to truly foster an ideal environment for businesses and blockchain and technology specialised employees.
Nicholas Warren is a senior manager in the Financial Services Practice Group at Chetcuti Cauchi Advocates.
Sarah Vassallo, the co-author, is a legal trainee within the Financial Services Practice Group at Chetcuti Cauchi Advocates.
Independent journalism costs money. Support Times of Malta for the price of a coffee.Support Us