On July 4th, 2018, The Republic of Malta adopted three bills establishing a robust regulatory framework for DLT (Distributed Ledger Technology), blockchain and cryptocurrency. The country, known as “blockchain” island, believes establishing clear rules and guidelines around these emerging technologies will attract entrepreneurs, innovation and technology companies. Regardless of Malta’s motives, the bills and dialogue surrounding the new legislation highlight the magnitude of the legal and ethical challenges created by technology, specifically those born out of DLT, blockchain, cryptocurrency, and artificial intelligence.

While the capabilities of robots and artificial intelligence is far from the Hollywood headlines of killer-bots wiping out humanity based on some self-generated ethics, technology is stressing our current legal frameworks and it’s time to evolve. In Rachel Wither’s Slate Article, The EU Is Trying to Decide Whether to Grant Robots Personhood, she recounts the story of a Dutch citizen whose artificial intelligent twitter-bot tweeted “at” a fashion show, “I seriously want to kill people.“ Despite the AI not liking fashion, and its response being a little freaky, it also brings up a plethora of legal questions that our current system isn’t equipped to handle. Was a crime committed? By who? Was there intent? Is anyone liable if public resources were used to respond to the threat? What if somehow the AI was able to harm people at the event, then what? I won’t go down the rabbit hole, but this real event scratches the surface of the challenges the legal industry faces resulting from disruptive technologies like blockchain and AI.



Perhaps of more immediate relevance, legal scholars now believe that autonomous artificial intelligence are close (if not already capable) of independently creating legal entities, like Limited Liability Companies (“LLC”) . Do we want legal status and rights given to organizations created by algorithms? Even if we don’t, can we stop them from having rights under current law? If AI’s are left unchecked to create, winddown, and transfer assets between entities, what stress does that place on anti-money laundering efforts, or on establishing liability in the event of a breach of contract or negligence? Even if you can establish an AI owned entity is liable, if they can quickly create new organizations in favorable jurisdictions and transfer funds electronically, how would judgements be enforced and carried out? The complexity of these challenges is not unique to AI and are shared by DLT and blockchain. The magnitude of the legal and ethical issues caused by these disruptive technologies are dizzying, leaving many scholars throwing up their arms uncertain of where to begin. However, as the issues above illuminate, we potentially risk significant disruption of our global economy if laws and ethics don’t catch up to technology, and we are long past the time for serious action.

While Malta’s legislation may lead to more questions than solutions, the effort should be commended for grappling with some of these issues and moving the conversation forward. Additionally, Malta’s legislative action creates a much-needed environment for legitimate and ethical utilizations of cutting-edge technologies to flourish and differentiate themselves from illegitimate solutions and outright fraudsters. While it remains to be seen if Malta’s efforts will stimulate significant economic activity, their efforts coupled with industry self-regulatory initiatives are critical to creating an environment where consumers and businesses can better identify those services and organizations committed to creating trust and legitimacy. Further, Malta’s leadership will force other jurisdictions across the globe to consider whether they want to participate in creating an ecosystem for legitimate modern business or operate in a grey economy. We should keep a close eye on the continued debates and discussions coming out of Malta as they just might foreshadow global debates and challenges to come.


Bayern, Shawn J., The Implications of Modern Business-Entity Law for the Regulation of Autonomous Systems (October 31, 2015). 19 Stanford Technology Law Review 93 (2015); FSU College of Law, Public Law Research Paper No. 797; FSU College of Law, Law, Business & Economics Paper No. 797. Available at SSRN: https://ssrn.com/abstract=2758222


Contributions to This Article Were Made by Clayton Pummill. Clayton is a Principal at Torch.AI focusing on legal, privacy, and cyber solutions for federal and corporate clients.