Gibraltar has put into effect a regulatory mechanism tailored to protect customers of cryptocurrency businesses and its own reputation as of January 1, 2018. The regulation targets blockchain technology — companies storing and transmitting value must now be licensed by the Gibraltar Financial Services Commission (GFSC).
World's First Framework
The Digital Ledger Technology (DLT) Regulatory Framework was introduced after the Gibraltar Legislature approved a bill last December to update financial services regulations. It lays the foundation for new legislation governing the cryptocurrency sector. "We are really excited to finally welcome applications from DLT providers. We expect to be very busy in the coming months," said Nicky Gomez, head of GFSC's Risk and Innovation Department. He noted that GFSC had become the first regulator to introduce a DLT regulatory framework in collaboration with the industry and government.
Gibraltar's Unique Position
As a British overseas territory, Gibraltar has a legal system independent from the UK, allowing it to develop its own policies and economic priorities. It has attracted financial and online gambling companies with corporate tax incentives and relaxed regulations. The new law paves the way for comprehensive rules addressing cryptocurrency challenges, positioning Gibraltar as an attractive location for crypto businesses and potentially adding a new pillar to its economy.
Consumer and Reputation Protection
All licensees must follow principles such as communicating with customers in a fair, clear and not misleading manner, and having proper regard to risks. Companies must also have effective arrangements for protecting client assets, including contingency, disaster recovery and crisis management plans. The GFSC website states that from January 1, 2018, any use of DLT for storing or transmitting value belonging to others requires authorization. Application fees, annual fees, and other charges are listed. Gibraltar is clearly taking no chances in balancing innovation with protection.