From 1 January 2018, Gibraltar is introducing a new regulatory framework for firms offering blockchain services. It will cover any commercial use of distributed ledger technology (DLT) as a means to store and transmit value.
This definition includes crypto-currency exchanges, the word ‘value’ is also defined as including “assets, holdings, or other forms of ownership, rights or interests”. Investment services and other controlled financial offerings connected to the technology will be covered as well.
Under the framework, DLT service providers will be granted a working license, providing they conform to certain regulatory principles, which include honesty, integrity, the protection of customer assets and maintaining a high degree of cyber security.
Samantha Barrass, chief executive of the Gibraltar Financial Services Commission (GFSC), said: “This regulatory framework demonstrates that regulators can keep up to date with technology without stifling innovation, protect consumers and create a well-regulated safe environment in which financial technology can flourish.”
The GFSC is further considering a complementary regulatory framework covering the promotion and sale of tokens or coins based on DLT as a means of raising finance, especially by early-stage start-ups. The sale of such tokens is often conducted using terms such as initial coin offering (ICO) or initial token offering (ITO).
ICOs are an unregulated means of raising finance in a venture or project, usually at an early-stage and often one whose products and services have not yet been significantly designed, built or tested, let alone made operational or generating revenue.
Earlier this year, the country’s primary securities exchange, the Gibraltar Stock Exchange (GSE), revealed a plan to integrate blockchain into its trading and settlement systems.
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