A mechanism tailored to protect customers of cryptocurrency businesses in Gibraltar, and its own reputation, went into effect on January 1. The regulation targets blockchain technology – companies storing and transmitting value must now be licensed by the Financial Services Commission (GFSC).
Also read: Malta Bitcoin Schizophrenia: Government and Banks Send Mixed Signals
Gibraltar – “World’s First”
The Digital Ledger Technology (DLT) Regulatory Framework has been introduced after last month the Legislature of Gibraltar approved a bill designed to update its financial services regulations. It laid down the foundation for new legislation governing the cryptocurrency sector in the territory with financial services and online gambling still considered the major pillars of the economy.
“We are really excited to finally welcome applications from DLT providers. We expect to be very busy in the coming months”, Nicky Gomez, head of GFSC’s Risk and Innovation Department, said, quoted by the International advisor. “We are looking forward to working on some interesting and innovative ideas with applicants”, he added.
Gomez pointed out that GFSC had become the first regulator to introduce a DLT Regulatory Framework in collaboration with the financial services industry and the government of Gibraltar. “It is a very encouraging time and we are looking forward to the challenge”, the official said.
True, Unrivaled in Europe
Being a British overseas territory, Gibraltar has a legal system that is quite independent from the United Kingdom. That has allowed it to develop its own government policies and economic priorities. Gibraltar has attracted financial companies and online sports betting and gaming businesses in its jurisdiction with corporate tax incentives and relaxed regulations, unrivaled by others in the EU.
In December the 17-member local parliament modernized the territory’s financial services legislation with a newly adopted bill. It paved the way for a comprehensive set of rules addressing challenges presented by cryptocurrencies and governing operations of companies in the sector. In doing that, Gibraltar has progressed on fulfilling its intentions to position itself as an attractive location for crypto businesses. They may actually build a brand new pillar to support its economy. And Gibraltarians, in their turn, may completely forget the times when the old British naval dockyard accounted for more than half of their economy.
For God, Queen… and Territory
In its latest move along these lines Gibraltar has laid out certain principles designed to protect consumers’ rights and interests, as well as its own reputation. All licensees will have to follow them. For example, every DLT provider should communicate with its customers in a way which is fair, clear and not misleading and have proper regard to risks to its business and customers. Companies must also have effective arrangements in place for the protection of client assets and money, including “contingency, disaster recovery and crisis management plans”.
So, Gibraltar is obviously taking no chances. A notification on the GFSC’s website clearly states that as from January 1, 2018, any use of distributed ledger technology for storing or transmitting value belonging to others will need to be authorized by the Commission. By the way, the following entries: “Initial Application Assessment Fee”, “Application Fee”, “Supplementary Fees”, “Annual Fees”, “Further Fees”, populate a list tucked in between the “Principles” and the “Frequently Asked Questions” sections.
Welcome to Gibraltar! Oh, and don’t feed the monkeys, please!
Do you think Gibraltar will manage to attract cryptocurrency businesses and customers? Tell us in the comments section below!
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