The Malta Digital Innovation Authority is taking a leading role in the software assurance process, essentially making sure that new and innovative pieces of software do what they claim to be able to do, hence providing more security and protection for users and investors, MDIA CEO Stephen McCarthy said.

Speaking at the Delta Summit on Thursday, McCarthy said that the MDIA had come up with a set of rigorous guidelines to give software functionality some credibility, and to safeguard users and investors.

The MDIA’s primary objective ever since it was founded a year ago was to set up a framework to ensure quality and dependability of Distributed Ledger Technology-based systems through a technology certification process with the help of system auditors which are approved by the MDIA.

McCarthy said that over the past year, the MDIA has had to build from the ground up, with no models or best practices to base itself on, as it is the first of its kind.

Indeed, the MDIA chose to go down the route where due diligence goes beyond that of the participating individuals, and delves deep into the underlying technology itself.

In this sense, McCarthy said, one of the most important lessons of the year was to identify the right balance between regulating technology to protect users and investors without stifling innovation, whilst simultaneously ensuring that the framework used by the authority scales down for start-ups.

In this sense, he said, the MDIA is in talks with Malta Enterprise to provide these start-ups with more specific and direct assistance in this field.

Another of the main challenges, McCarthy said, was explaining that blockchain and cryptocurrencies are not the same thing, and that – by extension – the MDIA’s role goes beyond regulation in this sense.  This being said, McCarthy noted that there has been a significant gain in momentum behind cryptocurrencies, noting that its use on a widespread scale is not a matter of if, but a matter of when.

McCarthy noted that there has been a considerable shift towards the use of DLTs backed by a sound and tangible business model, and noted that software assurances are key to this.  “All too often, software claims do not match actual functionality”, he noted before adding that as a result, rigorous guidelines are needed to safeguard users and investors.

He said that the MDIA was proud to have its first independent systems auditors including KPMG, PWC, BDO, and STIS group.  Their role will be to act as gate-keepers and audit innovative technology arrangements with an eye out for shortcomings in the development process, the implementation, and the quality assurance of the product in question.

While the MDIA’s focus was on DLTs, McCarthy said that many operators interested in the MDIA’s regulatory framework came from the Fintech area.  He said that the MFSA is the lead authority and the licensing authority, but noted that the MDIA has taken an active role in supporting the MFSA in the process of auditing and reviewing the underlying technology to such operators.

“Last year I stood here and spoke about the importance of safe-guarding reputation, and our guidelines, although stringent, are proof of this direction. We did not go for quick fixes or immediate gains, but rather for a long-term strategy”, McCarthy said.

“It is clear that this year, despite the challenges, we laid down the foundations for Malta as a hub for innovation”, he said.