An investigative review on the applicability of blockchain on the Maltese financial industry

Abstract

Financial technology continuously changes the way we interact and transact with one another. One of the more recent and major innovations in Financial Technology is Blockchain. Blockchain is a decentralized system that has no central authority or individual controlling it, however anyone can make use it and aid in running it. Blockchain is a system of publicly and digitally kept ledgers of economic transactions which are said to be fully transparent, immutable and viewable by all, thereby empowering its users. Blockchain is said to be a disruptive technology whereby within a financial transaction between a buyer and a seller, the third-party intermediary is no longer needed and is subsequently eliminated. The removal of the middle man in a transaction could have implications on the financial industry and this is what this study looks into.

The study which is focused on the local blockchain scenario looks into the applicability of this technology within the Maltese financial industry and delves deeper into its possible positive and negative effects. The objectives of the study were reached through six semi-structured interviews with locally based participants ranging from practitioners within the Maltese financial sector, a local regulator, a legal professional and a government spokesperson. All the participants were either involved in the implementation of blockchain technology in Malta and/or are working within the private financial sector. The study also looked into two other aspects namely, how the Maltese Government is planning to implement a national strategy to put Malta on the forefront of embracing and making full use of the potential blockchain brings, and how locally based practitioners perceive this technology.

This study concludes that Blockchain has many use cases, however there are a number of constraints which still need to be addressed before mass adoption of this technology can take place. Issues regarding its complexity, security, legal uncertainty and the lack of understanding by decisions makers were highlighted. Therefore, it could be concluded that through regulation and integration with an embracing financial sector, blockchain could still very well be applied into local businesses sooner rather than later.