On Wednesday April 15, the Malta Independent carried a detailed report on the Press Conference given by Parliamentary Secretary Silvio Schembri, who holds the Portfolio for Financial Services. During the Press Conference, Schembri presented the new bill for setting up an 'authority' to  regulate companies offering services in cryptocurrency and blockchain. The title of The Malta Independent spoke volumes. The bill is being introduced to 'appease the banks' concern regarding blockchain and cryptocurrencies'. At least, the Parliamentary Secretary was honest. The bill is being proposed and will pass in the primary interest of banks.

Clearly, Government is feeling the need that for companies to operate in this sector, in Malta, they must first be registered with the new 'authority'. It is also hoping to thus attract foreign companies to start operating from here. It will be up to the 'authority' to grant the necessary permits allowing the companies to operate from Malta.

As expected, the Nationalists, in Opposition, are going to support this bill.  In its reportage the Malta Independent made it clear that there is consensus on both sides of the House. This is a positive sign. Kudos to the PN. Whenever there are issues related to financial regulations, there appears to be overall agreement between Government and Opposition. Pity this does not happen more often.  If I am not mistaken, the first time both sides agreed to support a similar legislation was when the late Lino Spiteri was spokesman for Finance and the Labour Party was in Opposition. The Government of the day passed laws that revolutionized our local financial sector and the Opposition was in agreement. In the long run, these financial laws permitted Malta to become a global player in this field. Government now wants to obtain the same results with cryptocurrency and blockchain. There is nothing wrong in this. Unanimity can only increase the peoples' trust in cryptocurrency. At the moment, what cryptocurrency dealers want  to avoid is unnecessary controversy. At the same time, it is in the interest of the Opposition to tread carefully here so as not to appear either puerile or banal. It certainly should not follow the route of Labour when in Opposition when it opposed the introduction of cellular phones in Malta. The fact that the Government and the Opposition are agreeing on this new law goes to confirm what I have written in my past blogs on the subject: cryptocurrency is here to stay.

But will this bill regulate cryptocurrency? I doubt it. With or without this bill, companies not registered in Malta can still operate locally through the net. It will be difficult for banks to stop money being transferred to and from companies that are not registered locally. Therefore, what is this law seeking to do? It is simply trying to bring cryptocurrency into what can be defined as a permission zone. This means that this bill is trying to centralize this type of transaction. What makes cryptocurrency revolutionary is the very fact that it cannot be controlled by banks or governments. This bill appears to be trying to do so.  It wants to reassure bankers.

Currently, conventional money transactions enable governments to pursue reckless financial and social policies. Governments and banks can manipulate the economy and devastate savings through inflation in a bid to wipe out their irresponsibly contracted debts. Our current system allows governments to print money, despite lacking sufficient gold to back it. This has consolidated Government's power and its sovereignty over money matters. In the process, banks have gradually become an extended arm of government and definitely not working in the interests of the private citizen. Cryptocurrency is a serious threat to all this. Cryptocurrency does not allow governments and bankers free rein; cryptocurrency was created to stop governments from having control over our money. This is why it is a direct threat to both bankers and governments. They have yet to find the means to control it. So far they have not succeeded. My view is that cryptocurrency will end up destroying the power of states in adopting reckless fiscal policies that destroy the small time investor and those with savings.

This is why I have said in my previous blog on this subject that the loss of government power over money will produce a conservative socio-economic revolution and why I envisage the return of the once traditional family.

History teaches that those societies with fiscally, socially and economically conservative family units register the highest economic profits. The stronger the family, the more hard working it is. Strong families are those that save most and spend their money judiciously. They avoid irresponsible social behaviour, and do not need to be dependent on government. Perhaps we, as a nation, need to reflect more on these values, particularly when celebrating May 1.

The survival of paper money necessitated a systematic attack on the family. From this attack, governments and bankers benefitted most. Governments based their economies on meaningless consumption and constant inflation. As inflation increased in the so-called economically advanced countries, the attack on the family increased with the same force. Western democracies - until recently the acerbic enemies of Marxism - started falling in love with this theory.

The genie is now out of the bottle. Even if an authority is set up to try to control cryptocurrency,  it will be only putting under control one type of currency. There are plenty of places in the world which will allow permissionless and decentralized cryptocurrency to operate within their fold. Therefore, it is very difficult for cryptocurrenicy to come completely under control and why I strongly believe that these types of currencies will survive.

This bill tries to address all these concerns. It voices the western world's obsession with control and regulation. The world global financial system operates through control and regulation and this is permitting them to exclude poor countries from participating in sharing the accumulated wealth. Cryptocurrency is giving the chance to these countries to access capital. The giant states of today will end up without the endless supply of cheap money that they need for their self-perpetuation. In simple words, they will starve.

Thus by agreeing to this bill, both Government and Opposition are recognizing the fact that cryptocurrency is destined to bring a shift to the state control over currency. They are agreeing that the state should continue exercising such control. They are also admitting that cryptocurrency is giving more control to the citizens over their money. My premonition is that our government has already started to feel the shift of control from banks into the hands of citizens and this can be read between the lines of this bill. In cryptocurrency, this shift occurs on a peer-to-peer basis. This bill is seeking to do this by exercising a peer-to-peer control through its appointed officers at the new 'authority'.

In the short term, these regulations will give a boost to cryptocurrency because they will increase the trust of the people in this form of monetary transaction. But in the long run, the authorities will work to stifle the independence of cryptocurrency. What this law is seeking to do is to put this new form of currency under the control of the regulator. Only time can tell whether it will succeed or not. My hunch is that it will not.