When Bitcoin first emerged back in 2009, it was described as a ‘crypto-currency’ based on ‘blockchain’ using ‘Distributed Ledger Technology’ (DLT). No doubt a few ‘tech-heads’ were already familiar with these terms but the general public was definitely not. Almost 10 years on, not only are we all acquainted with the terminology – indeed it is inescapable – but, for an increasing portion of the business community worldwide, they are fast becoming essential applications. Sovereign has positioned itself at the forefront of this exciting new world.
In practical terms, what can DLT be used for? Simply put, it will revolutionise work – be that for companies, governments and ultimately, all of us. This brave new world doesn’t stop at document storage and data management, anything that requires accurate, secure recordkeeping will use DLT in the future – for example, land records and personal documents, such as driving licences and passports.
While initial interest has focused on finance-related applications, such as payments, clearing and settlement, non-financial players have also been looking for ways to leverage the opportunities that DLT opens. Interesting areas include supply chain certification, helping artists and musicians to attribute digital art, media and content distribution, commodities, digital identity and authentication, reputation verification, energy, ride-sharing, gaming, consumer engagement, even e-voting.
Gibraltar and Malta are two European jurisdictions that have recognised the value that could be generated by the orderly regulation of DLT and related business. Both jurisdictions were among the first movers in regulating online gaming businesses a generation ago. That proved enormously successful and the governments of both countries are keen to repeat the experience.
Since 1 January this year, any firm carrying out by way of business, in or from Gibraltar, the use of DLT for storing or transmitting value belonging to others (DLT activities), are required to be authorised by the Gibraltar Financial Services Commission (GFSC) as a DLT Provider. This was a world first and rules governing initial coin or token offerings (ICOs and ITOs) are set to follow shortly. Keen not to miss out, Malta’s own DLT legislation is now in its final stages of development and we expect the sector to become regulated on that island very soon.
It is clear from the daily enquiries we receive that there is huge appetite from businesses in the DLT and related areas to secure regulation. It provides them with structure and credibility and gives confidence to their customers and investors. Gibraltar and Malta are exceptional places to set up and create substance. Moreover, their legal systems are based on English law and are accompanied by attractive tax regimes. The potential benefits to the business communities in general could be enormous.
It may be a ‘brave new world’ but it is one that the governments and the local finance professionals in both jurisdictions are keen to embrace. As one of the largest regulated financial services players in Gibraltar and Malta, Sovereign is already authorised in both jurisdictions and is therefore ideally placed to help new entrants seeking to set up their DLT businesses. Contact Sovereign’s DLT team to determine how we can work with you to make your DLT business a success.