Malta ups its game with new blockchain registry for property
Already known as one of the most friendly countries on earth for both cryptocurrency and blockchain, Malta has decided to step up its game by introducing a brand-new blockchain for registering property rental contracts. Malta's prime minister and cabinet are now putting the finishing touches on rules they expect to release in the coming weeks.
Under the current rental environment, it is possible for contracts to be entered into without any kind of formal registration. That means it is also possible to rent property without any official, traceable record. Malta's government wants to put an end to that. Along with a package of rental law reforms, the blockchain program is designed to guarantee that no property can be rented without producing a record that is both traceable and unalterable.
Regulators have waited for months to finalize the rules in order to account for public comments. According to Malta Today, some 250 entities responded during the open comment period.1 With all those comments considered, regulators are just about ready to submit the new rules to Parliament for its approval. Malta Today expects them to receive the legislation before they take summer recess.
The perfect registration vehicle
Forced registration of rental contracts may not be okay with every property owner in Malta. But as long as the government is going to mandate registration, blockchain is the perfect vehicle for doing so. News reports say that the rental property blockchain will utilize is the same distributed ledger technology that powers cryptocurrencies like Bitcoin and Litecoin.
Whether or not that means the blockchain was built from the Bitcoin core is unclear. In all likelihood, it was not. Developers probably started with the Ethereum blockchain. Be that as it may, the point remains the same. Blockchain's distributed ledger system is ideal for recording rental contracts.
In a distributed ledger scenario, multiple copies of the same ledger exist on different computer nodes. Completing a transaction sends the information to the network where it is picked up and processed by each node. Once all of the nodes verify the transaction as legitimate, it is added to the next block in the chain and thus made permanent.
This creates a record of the transaction that cannot be altered. The immutability of the ledger means that contracts cannot be deleted or modified once they have been verified. Authorities in Malta hope that turning to blockchain will all but eliminate fraud in the nation's rental market.
An already crypto friendly place
No one who pays attention to the minutia of the cryptocurrency space would be surprised to learn what Malta is set to do before the end of the summer. Why? Because Malta is already a place very friendly to cryptocurrency and blockchain. They are so friendly, in fact, that Malta has earned the nickname 'Blockchain Island'.
Malta makes no bones about the fact that it wants to be the crypto hub of the world. Government leaders have bent over backwards to create a regulatory environment that is extremely friendly to cryptocurrency development, blockchain companies, trading, and even spending. The country is one of only a few that already has a legal framework for cryptocurrency in place. Exchanges are legal in Malta and operate pretty much untouched, such as Binance. As for exploration and innovation, companies find an open door in Malta.
Taxes are another thing that sets Malta apart. International companies doing business in Malta pay only 5% tax. The average tax rate in the EU is 22%. That makes Malta a prime destination for cryptocurrency and blockchain companies looking to expand their operations globally.
Bitcoin gambling in Malta
We think it's awfully interesting that Malta is also a haven for online gambling. As early as 2002, Malta was a forward-thinking country in terms of embracing online gambling. Operators love Malta for a variety of reasons, not the least of which is the fact that they can choose from among four different license options.
The Class 1 License is the most basic license. It allows for remote gaming including online casino games and lotteries. The higher licenses incorporate more opportunities for operators. The point is that Malta isn't trying to regulate online gambling operators so strictly that it is impossible for them to do business there. They welcome online gambling with open arms.
What does this have to do with blockchain and cryptocurrency? If you are a Bitcoin gambler, you already know the answer to that question. Combine Malta's open arms policy toward online gambling with the desire to be the cryptocurrency hub of the world and you have an environment just inviting Bitcoin gambling sites.
A gambling operator looking for fair regulations and an environment in which Bitcoin, Litecoin, etc. are welcomed would instantly look to Malta. If there is one country in which it is actually lucrative to combine cryptocurrency and online gambling, it would be Malta.
If you use bitcoins to play slots online for example, it is a good bet your chosen casino is registered either in Malta or the UK. You can always scroll down to the bottom of the page to find out for sure.
Leave it to bureaucrats to find something wrong whenever an industry enjoys moderate success. Malta knows this firsthand, especially since the International Monetary Fund (IMF) began calling out the Mediterranean island for its liberal cryptocurrency policies. The IMF even sent a team to Malta earlier in 2019 on a fact-finding mission.
IMF inspectors looked at everything from blockchain companies to the gaming sector. They came away with the opinion that Malta is now a haven for money laundering and financing terrorism. Malta's government leaders passionately disagree.
As you might expect, regulators throughout the European Union are now looking for ways to force Malta to be tougher on crypto, blockchain, and online gambling. They are bound and determined to make sure the bad actors are not taking advantage of Malta's policies in order to engage in nefarious behavior.
As for Malta's leaders, they are equally committed to pressing forward with their blockchain and cryptocurrency plans. They are so serious about their commitment to the technologies that leaders are continually working on new bills and policies. Do not expect the rental contract rules to be the last you hear of blockchain in Malta. They are only the latest in what many expect to be a process that continues for years.
Similar uses for blockchain
As we wrap up this post, let us back away from Malta and consider similar uses for blockchain. Let us start with property purchases. If tracking rental contracts with blockchain is a good idea, it makes sense that doing the same with purchases would also be smart. Why not create a distributed ledger system for recording real estate transactions for both residential and commercial properties?
In some countries, purchase transactions are still governed by paper ledgers and deeds. Despite all of its advances in technology, the U.S. still utilizes an antiquated system of recording sale purchases. Buy a house in the U.S. and you will have to sit tight while someone does a title search for you.
A title search involves going back and digging up records on every person who has owned the house before you. Those records have to be verified. Then the paper trail must be followed to guarantee that no one has a lien on the property. It is a time-consuming process that doesn't make a lot of sense.
If the U.S. implemented a blockchain and distributed ledger system, the next time a title search is run on a house would be the last time such a search was necessary. All of those records could be entered into the blockchain and made permanent. From that point forward, the records would be unalterable, thereby guaranteeing a more efficient process for future transactions.
The same blockchain system can be utilized to track insurance claims on properties. A system could be implemented for maintaining property tax records. Virtually anything that has to do with residential or commercial property could be tracked and permanently recorded on a distributed ledger.
A great idea waiting to happen
From our limited perspective, it seems like what Malta has come up with for rental contracts is a great idea just waiting to happen. Quite frankly, it is surprising that it has taken this long for someone to figure out how to apply blockchain technology to property transactions. Property is one area of the economy that has relied on paper and electronic ledgers for as long as human beings have been buying and selling it.
Concerns among the IMF and other regulators are certainly understandable. There is a lot about cryptocurrency and blockchain that is new to them. And what people do not understand they generally fear. In this case though, requiring all rental contracts to be registered and tracked on a distributed ledger is a great idea. Not only is there nothing to worry about, but the new system should actually benefit both renters and property owners in Malta.
If you plan to rent property in Malta in the future, chances are your contract will be recorded on the government blockchain. You will be part of a new system intended to clean up the records and eliminate fraud.
1) Malta Today. Rent contracts will all have to be registered on the blockchain, Prime Minister says.