By Jonathan Garcia, Partner, ISOLAS LLP

Gibraltar has never shied away became the first jurisdiction in the world to regulate Distributed Ledger Technology (DLT).

That early move earned it a reputation as a jurisdiction willing to embrace innovation while ensuring guardrails were in place. Today, Gibraltar is pushing the frontier once again. The government has announced plans for a groundbreaking regulatory framework that will govern the digital clearing and settlement of virtual asset derivatives.

This is no small step. Clearing and settlement sit at the very heart of financial markets. Traditionally, central counterparties play this role, reducing systemic risk and ensuring that trades between buyers and sellers are executed and finalised without dispute. In the digital asset world, however, this safety net has been largely absent. Most transactions have relied on exchanges, with varying degrees of security and oversight. Gibraltar aims to fill this gap with a framework that brings institutional standards to the digital asset space.

Government and Industry

The new framework, developed in collaboration with the Gibraltar Financial Services Commission (GFSC) and the exchange Bullish, is being positioned as the world’s first dedicated regulatory regime for crypto clearing and settlement. It will provide a roadmap for how risks are managed, how assets are safeguarded, and how settlement finality is guaranteed. Minister for Trade and Industry, The Hon Nigel Feetham MP KC, called it a reflection of Gibraltar’s commitment to ‘responsible innovation.’ Bullish CEO Tom Farley praised the initiative as a model for public–private partnership done right, showing how governments and industry can work hand-in-hand to build trust.

Stablecoins, digital money for a Digital Age

Alongside clearing, stablecoins are becoming essential to the crypto economy. Unlike volatile digital assets, stablecoins are designed to maintain steady value by being pegged to currencies like the US dollar or the Euro. They are the quiet workhorses of the digital market, allowing traders and institutions to move in and out of volatile positions without leaving the blockchain ecosystem.

As of mid 2025, stablecoins represent more than $250 billion in circulation, with the vast majority tied to the US dollar. They act as liquidity bridges – helping traders move seamlessly between assets, powering decentralised finance platforms, and increasingly, handling real-world payments. For consumers in emerging markets, they offer a lifeline against inflation and unstable banking systems. In this sense, stablecoins are more than trading tools; they are becoming instruments of financial inclusion.

GENIUS Act

But with rapid growth comes regulatory attention. Policymakers are concerned about how reserves are managed, whether assets are truly backed one-to-one, and how sudden redemptions could destabilise financial markets. This has sparked a wave of new rules around the world. In the United States, the GENIUS Act was passed in July 2025, requiring stablecoins to be fully backed with liquid assets and subject to regular audits. In Europe, the MiCA regulation has brought both domestic and foreign stablecoin issuers under strict oversight. Hong Kong and Singapore are rolling out similar requirements. The message is consistent: stablecoins can enable innovation, but they must also guarantee transparency and trust.

Why Gibraltar’s move matters

So why does Gibraltar’s clearing framework matter in the context of stablecoins? Because it positions the territory at the sweet spot of two global trends. On one side, it is building world-first infrastructure for clearing and settlement in crypto markets.

On the other, it is aligning itself with the new wave of regulation around stablecoins, which are quickly becoming the backbone of digital payments and liquidity. Few jurisdictions have managed to get ahead on both fronts simultaneously.

Together, these initiatives create a powerful value proposition. Institutions looking for safe, well-regulated entry points into crypto will find Gibraltar ready. Investors will see a jurisdiction that balances innovation with oversight. And firms will discover an ecosystem designed for resilience as well as growth. For a small territory, the impact could be outsized, positioning Gibraltar as a natural hub for digital asset activity in Europe and beyond.

A glimpse of the future

The potential applications are vast. Imagine a future where tokenised dollars move across borders in seconds, clearing and settlement happen instantly under Gibraltar’s new regime, and derivatives are managed with the same rigour as traditional finance. Stablecoins could fuel global trade, while digital clearing ensures the system is safe, efficient, and scalable. This is not just speculation – it is the direction markets are already moving. Gibraltar’s role is to make sure the infrastructure is ready when the demand fully arrives.

By marrying stablecoins with digital clearing, Gibraltar is not only keeping pace with global change – it is leading it. Once again, the Rock is proving that being small on the map does not mean being small in vision. In the fast-evolving world of digital assets, Gibraltar is showing how to build a future that is both innovative and secure.

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By Eilish Bouse, Director, Risk Advisory, Insurance Risk & Actuarial, Grant Thornton Gibraltar

Gibraltar is a major hub for a number of business sectors, including insurance, fintech, gaming, and e-money – industries well-suited to AI adoption due to their scale and data richness. AI offers significant growth and efficiency, as well as assisting with challenges of local recruitment. Understanding AI’s potential and pitfalls is essential for businesses striving to remain competitive in today’s rapidly evolving, digital-first world.

What is AI?

AI refers to technologies that enable machines to perform tasks traditionally requiring human intelligence, including recognising patterns, analysing data, and making decisions. Earlier tools, like Excel and SQL databases, allowed businesses to manage structured data but required significant manual input. Later innovations, such as Power BI and Salesforce, incorporated machine learning features to improve functionality, but remained limited in adaptability.

Modern AI systems, driven by advanced machine learning and neural networks, process large volumes of real-time data, uncover hidden patterns, and make parallel decisions. Generative AI tools, such as ChatGPT and Gemini, mark a new era, offering capabilities such as natural language processing, rapid prototyping, and content generation.

For Gibraltar businesses, these advances offer new solutions to longstanding challenges, boosting efficiency and growth. A 2023 industry survey found that 62% of CFOs and 58% of CEOs believe AI will be the most influential factor in shaping their industries over the next three years.

Gibraltar’s economic landscape

Insurance – Gibraltar’s well-established insurance industry benefits from a robust regulatory regime and passporting rights into the UK market. Gibraltar-based insurers hold over 30% of the UK’s motor insurance, 30% of the travel insurance and 20% of the pet insurance.

Gaming – Gibraltar oversees 60% of all global online gaming and has been a key hub for the industry for over a decade. The gaming industry contributes about 25% of Gibraltar’s GDP and employs roughly 3,800 people.

Fintech – Gibraltar’s progressive regulatory environment has attracted global digital finance firms, establishing it as a leading fintech hub.

Businesses in these sectors are facing global competition, regulatory change, and the pace of technological advancements – fortunately industry leaders can deploy AI as a transformative toolkit.

Key opportunities for AI integration

Insurance
AI enhances operational efficiency and reduces costs in insurance. Predictive analytics improves underwriting accuracy by enabling deep and rapid analysis of data. AI-enabled fraud detection tools identify anomalies, whilst also enhancing customer satisfaction via quick claims approvals. Overall, there are potentially billions of annual savings in improved loss ratios, ultimately lowering customer costs.

Gaming
AI is transforming the gaming sector by creating personalised player experiences. Operators can use predictive analytics to gain deeper insights into player preferences, improving retention and enabling more targeted marketing strategies. With AI-driven gaming solutions projected to grow at a CAGR of 22.7% reaching a value of USD 5.7 billion by 2030, Gibraltar-based operators are wellpositioned to capitalise on this opportunity.

Fintech
AI is transforming fintech by enabling smarter credit scoring and enhancing regulatory compliance. AI-powered credit models use alternative data sources like transaction histories and spending patterns to provide more accurate and inclusive risk assessments. Additionally, AI streamlines Know Your Customer (KYC) processes by automating identity verification and flagging inconsistencies in real time. It has been reported that AI automation enhanced customer onboarding efficiency by up to 90%.

Risks and pitfalls of AI

AI adoption brings challenges that businesses must navigate carefully:

Bias and Fairness – Poorly designed algorithms can perpetuate discrimination, in sensitive sectors like insurance and finance.

Transparency – The “black box” nature of many AI systems can make it difficult to explain outcomes, for instance reducing user confidence, or complicating regulatory compliance.

Cybersecurity – AI systems are vulnerable to attacks, including adversarial manipulations and data breaches.

Regulation – Industries such as insurance and fintech face increased scrutiny when deploying AI, requiring robust governance frameworks.

Robust design, regular oversight, and continuous bias monitoring are crucial to demonstrate responsible AI use in Gibraltar’s high-risk sectors.

Effective AI adoption

To successfully integrate AI, businesses should adopt a strategic and phased approach. The first step is to assess operations and identify tasks where AI can automate processes or enhance decisionmaking.

Starting small, with agile pilot projects, allows firms to test AI tools, demonstrate value, secure buy-in, and refine strategies before scaling. Upskilling employees in data analytics and AI fundamentals is also essential to ensure teams can work effectively with the technology.

Additionally, AI solutions must align with existing IT infrastructure to minimise disruptions during deployment. Finally, regular evaluations are critical to monitor outcomes, optimise performance, and ensure compliance with any relevant regulations

Conclusion

Gibraltar’s key industries stand at the forefront of AI-driven transformation. Businesses can secure growth and global competitiveness by adopting AI to improve processes, enhance fraud detection, and deliver personalised experiences. While leveraging AI’s capabilities, companies must remain mindful of ethical and regulatory considerations and the importance of trust. By acting strategically, Gibraltar’s businesses can lead the way in an AI-powered future, solidifying their position as innovators in a rapidly changing world.

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When FTX collapsed in November 2022 it shook the entire digital assets ecosystem; currency values plunged, and consumers, institutions, and regulators panicked. The entire industry was dominated by fear and shock. For one of the world’s largest cryptocurrency exchanges, trusted by over a million users to collapse, will go down as one of the darkest days in the industry’s evolution. In 2023, while immediate fears of a catastrophe have faded, the collapse has shaken the industry and businesses will have to work on winning back public and institutional trust. It won’t be easy, but by drawing on the industry’s strengths, it is possible.

Failure of internal corporate controls

Unlike many critics had predicted (or in some cases hoped for), the collapse was not a fault of the technology, which is proven and safe, but rather a complete failure of oversight, proving the need for increased scrutiny and due diligence. The FTX collapse represents a comprehensive failure of internal corporate controls and no risk management, to a large extent missed until it was too late. While it could be thought that the crash being caused by human error will make it difficult to rebuild customer trust, the reality is that embracing its technology-enabled decentralised heritage and ramping up investor protections will, in time, allow that trust to rebuild. Crypto was conceived as a way to democratise currencies, putting control of trades and ownership with users.

Robust regulation has shown itself as a useful tool in many asset classes as they develop – bringing a recognised rule book to industries that otherwise may seem unfamiliar. To rebuild trust in the sector, companies should begin work to expand their regulatory footprints. By embracing multi-jurisdictional regulation, companies voluntarily put themselves up for enhanced scrutiny, improving trust in the integrity of their processes. This multi-jurisdictional approach can also reduce the risk of missed warning signs, helping to protect a business, its investors and leadership, and customers – vital as cryptocurrency usage continues to rapidly increase.

Gibraltar a robust and dynamic regulatory choice

The Rock is strategically placed to serve as a cornerstone jurisdiction for entities exploring regulatory approvals in different territories. The jurisdictions ‘right touch, not light touch’ regime, coupled with the 10 core principles, including corporate governance requirements, segregation of client assets and more recently setting the standards for market integrity, makes Gibraltar a robust and dynamic regulatory choice.

This pedigree is already well-proven. More than 15 regulated DLT Providers are operating in Gibraltar. The Gibraltar Financial Services Commission (GFSC) is responsible for regulating and supervising DLT activities in Gibraltar and monitoring compliance – a role in which they have proven themselves and won international plaudits. Adding to the landscape of scrutiny, are the Gibraltar Financial Intelligence Unit (GFIU) an entity responsible for facilitating the receipt, analysis, and transaction reports. This added layer of scrutiny allows regulators to keep tabs on financial dealings and serves to further build trust within the digital assets ecosystem.

Protection of client assets

On a practical level, a crucial principle Gibraltar has in place requires Distributed Technology Providers to have robust systems to ensure the protection of client assets and ensure strong corporate governance. These systems can also be used to prevent, detect, and disclose financial crime risks such as money laundering and terrorist financing. These principles protect customers and help prevent situations like FTX.

In 2018 Gibraltar became the first jurisdiction in the world to provide a purposebuilt regulatory framework for businesses that use Blockchain or Distributed Ledger Technology (DLT), allowing firms to operate in or from the Rock with confidence. Gibraltar is a leading jurisdiction for strong regulations in the cryptocurrency industry and continues to develop rules to protect consumers and encourage innovation.

This year serves as an opportunity for Gibraltar to step up to the mark once again and cement itself as a vital jurisdiction in the industry’s global development. As the industry evolves, I have already seen some of my clients look to pursue licenses in Gibraltar as well as the other territories in which they hold licenses, and it seems a welcome trend. Choosing a multi-jurisdictional regulatory footprint looks set to be a prudent approach. Drawing on our rich ecosystem of DLT companies and service providers, coupled with research, education, and good, dynamic governance, we here in Gibraltar are ready to play our part in continuing to serve the growing global industry as it works to rebuild consumer trust and step into a new era of adoption.

The post Gibraltar’s role in the future of Crypto appeared first on Gibraltar International Magazine.

One of the greatest barriers to the effectiveness of blockchain regulation can sometimes be the perception that there is an unwillingness on the part of regulatory authorities and governments
to ensure that regulation is built around a sound understanding of the industry and its needs. Developing an understanding of the technology is a critical aspect of developing confidence in the framework that any government builds, however these frameworks are then firmly enforced by the regulator themselves, in effect, enforcing a policy that we set as a government.

In Gibraltar, we realised early on that in order to attract the best firms in the industry, we needed to have a comprehensive regulatory framework. However, input from the industry itself was crucial in creating a framework that was fit for purpose and served our key objectives. Our motivation to introduce the framework centred around the opportunities we believed would accrue to
the jurisdiction in attracting industry leaders to Gibraltar.

There are very few jurisdictions or bodies around the world that have developed an all-encompassing regulatory and legal framework for the Blockchain and Distributed Ledger Technology (DLT) industry. In particular, a set of rules that promote innovation whilst providing the required levels of risk management and oversight.

Initially there was reticence given major concerns around the safety and longevity of the industry. There followed a period in which the industry was considered too small, even insignificant, when compared with traditional financial services to be of concern. Views are evolving and developing and perhaps, some may say, a more responsible and proactive attitude is being displayed. Gibraltar introduced its framework on the first of January 2018, which in an industry that moves as quickly as crypto, is quite some time ago. More recently we have seen moves by, for example, the EU Commission, to introduce “EU-wide rules for blockchain to avoid legal and regulatory fragmentation”. The EU intends to achieve this through the Markets in Crypto- Assets Regulation (MiCA).

The European Central Bank

Interestingly, one element that is driving this base change in attitude is the opportunity of introducing sovereign digital currencies, a change that some see as moving from a remote possibility to an ambition. In October 2021 the US Federal Reserve announced plans to “review the potential benefits and risks of issuing a U.S. digital currency, as central banks around the world experiment with the potential new form of money.” The European Central Bank stated in June 2021, that it “and the European Commission services are jointly reviewing a broad range of policy, legal and technical questions relating to the possible introduction of a digital Euro. “ The digital yuan introduced by the Chinese government is reported by a senior Chinese Central Bank figure, as of October 2021, to have led to some “140 million people opening wallets” and “using them for transactions totalling around 62 billion yuan ($9.7 billion)”.

Resting on our laurels is not an option, we need to continue to develop our proposition across all the commercial areas that we are active in. The DLT regulatory framework will become 10 core principles adding the 10th which centres around regulating market integrity, which will again be the first of its kind for virtual asset service providers. It is incredibly important for us to keep at the cutting edge of regulation in this and other sectors and build upon the work we have carried out so far. I am also pleased that we announced in December 2021 a forward-thinking collaboration, alongside IOVLabs, the team behind the RSK blockchain and leading South American crypto exchange Bitso, who are licensed in Gibraltar. This collaboration will result in the Government of Gibraltar integrating blockchain technology into our legacy systems in order to streamline government processes. It is envisioned that the implementation, which will initially be rolled out on a pilot basis, will improve the delivery of public services to individuals and organisations residing or operating in Gibraltar.

eGov system

This proposed blockchain solution will enable citizens of Gibraltar to store government-issued and certified credentials on the blockchain, building upon our eGov system. Our government has developed a close working relationship with both Bitso and IOVLabs over time. Working hand in hand with the private sector has made this possible at this stage. The implementation of blockchain technology into our processes will further improve the way in which our community interacts with the government.

This integration represents the fact that the jurisdiction itself benefits from working with the private sector, highlighting innovation that spurs from collaboration. While we are pleased to have reached this point, we have not done it alone: it has been a partnership between the public and the private sector. We are delighted to have successfully positioned ourselves as a forward-thinking jurisdiction for innovative businesses developing and offering blockchain-related solutions.

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Over the last few years, a number of developments in Gibraltar from disparate fields have converged to create the ultimate eco-system for crypto funds. Although this has been evident to many Gibraltar practitioners for some time, it has now become apparent on an international basis through the publication of PwC’s 3rd Annual Global Crypto Hedge Fund Report for 2021 which lists Gibraltar as in the top three jurisdictions in the world for the establishment of crypto funds and for the management of digital assets. Let us analyse these elements individually.

The Regulatory Regime

The Experienced Investor Fund regime in Gibraltar has long been known as an innovative regime that replicates much of the flexibility one has come to expect from Cayman Islands’ funds, while existing in an OECD white listed and robust, European style regulatory framework. The EIF regime is the only such regime on this side of the ‘pond’ that allows a fund to be launched and widely marketed without any regulatory pre-authorisation for all categories of funds. This is done on the basis of a legal opinion from a senior Gibraltar lawyer, validation from an authorised fund administrator and the presence of two authorised directors on the board of every EIF. While a comprehensive regulatory review does indeed take place, it does so after the funds launches, which means that there is no regulatory down time. Some jurisdictions have similar products, but these involve the presence (and the cost) of heavily regulated managers and therefore would generally not be suitable for the establishment of a sub-AIFM threshold crypto fund. The EIF regime places no restriction on classes of assets, which means that there is no impediment for an EIF to invest in digital assets. Indeed, the Gibraltar Financial Services Commission has issued a circular confirming that EIFs may be used for the creation of crypto funds.

Responsible Crypto Governance

Although there are no statutory restrictions pertaining to crypto funds, there are clearly issues that do not necessarily occur in more traditional funds and that need to be addressed in crypto funds. This has been done by the Gibraltar Funds and Investments Association (GFIA) in its Code of Conduct for Crypto Funds which was issued in October 2018, the world’s first crypto funds code. This, alongside with the 2014 Code of Conduct for Funds which is more general, provides guidance on topics that must be considered in the context of crypto funds such as security, custody, liquidity policies, disaster recovery procedures and hacking protection. Both codes work on a “comply or explain” basis and they are therefore not prescriptive.  The 2018 Code identifies many important issues and policies that must be addressed in order to manage a crypto fund responsibly.

“If you build it, they will come…”

Gibraltar’s heavy investment in digital business infrastructure is paying dividends. In 2018, Gibraltar introduced its Distributed Ledger Technology Legislation. This legislation has provided a framework and ecosystem for the digital industry in Gibraltar, even in areas it does not necessarily regulate such as crypto funds. Although this industry clearly existed before the enactment of the legislation, it has developed extensively as many digital entrepreneurs have sought a fit-for-purpose regulatory framework in which to domicile their crypto businesses. 

Indeed, in an age where it is notoriously difficult to set up bank accounts or to find other service providers who both understand and are willing to deal with crypto assets, Gibraltar has developed a strong offering of such providers who are able to address the needs of crypto businesses. This holds true for banks, fund administrators, directors and even auditors who have had to develop valuation methodologies for assets that, as yet, have few, if any, recognised standards.

Brexit and the Dual Regime

GFIA, the Government of Gibraltar and the GFSC are in the final stages of drafting legislation that would amend the Alternative Investment Fund Managers (AIFM) regulations in order to allow funds over Euro 100 million to dispense with the need for costly AIFM Managers and Depositaries. Gibraltar exited the European Union along with the United Kingdom on December 31st 2020. However, law that was in effect on the eve of Brexit remains so unless amended. This means that Gibraltar funds, must still comply with the provisions of the AIFM regulations in spite of the fact that they no longer have access to the European marketing passport for professional Investors. GFIA posited that if Gibraltar funds no longer have access to this passport, then neither should they bear the burden of AIFM regulation. Legislation will now be amended in order to allow Gibraltar funds to “opt out” of these regulations and thus be on a level playing field with other non-European fund jurisdictions. These funds will, of course, remain regulated under the EIF regime.

Conclusion

The increase in establishment in Gibraltar crypto funds has also had an effect on the non-crypto elements of its funds industry. Possibly as a result of the Dual Regime, or because of the positive publicity that Gibraltar has had in the last couple of years concerning its DLT legislation, the fact that it was one of the first countries in the world to vaccinate its entire population against Covid or the fact that it entered into an historic tax treaty with the Kingdom of Spain. These have all augured well for Gibraltar and indeed, incorporations are up for funds in other asset classes as well. The Gibraltar funds industry is indeed finding its day in the sun.

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Regulators cannot effectively oversee the blockchain and cryptocurrency industry without the experts in the DLT community, writes The Hon Albert Isola MP, Gibraltar’s Minister for Digital and Financial Services

A few months ago, an explanatory memorandum drafted by the European Commission on the regulation of Markets in Crypto-assets (MiCA) was leaked to the international media. Subsequently, the regulations were published by the European Commission and the reaction has been mixed among the Distributed Ledger Technology (DLT) community. For example, some members of The International Association of Trusted Blockchain Applications (INATBA) have expressed concerns, while agreeing with the stated goals of the regulations. While the European Commission then clarified a number of concerns surrounding the legislation. The fact that this debate is ongoing, however, is irrefutably important and positive. No stakeholder will be happy with legislative decisions that are made by one side without consultation of the other, but what is most important is that both sides are learning from each other in the process.

The DLT industry is still relatively nascent

The importance of such discussions cannot be overlooked, especially in times of crisis. The DLT industry is still relatively nascent, although this year, in particular, has shown its potential for resilience in the face of adverse situations. In Gibraltar, we are immensely lucky to have avoided some of the very worst impacts wrought by the Covid-19 pandemic. DLT exists in a similar vein. The DLT industry cannot only withstand turbulent times. It is built to thrive throughout such times due to its very nature. Distributed Ledger Technology is, by definition, distributed, or decentralized. A DLT company does not have to exist on one peninsula or in one jurisdiction; it can operate independently involving multiple stakeholders in various corners of the world. This makes the DLT industry uniquely positioned not only to withstand the oncoming effects of subsequent waves of the Covid-19 pandemic, but crises in general. It is for this reason that the coming together of regulators and DLT industry players is of utmost importance.

Many economists have argued that outbreaks similar to Covid-19 are an unfortunate consequence of globalization and that if we are to continue to live in a globalized world, we must learn to adapt our societies and economies to do so. The regulation of DLT should be at the forefront of the minds of the regulators, for the very reason that this pandemic may not be an isolated event. We may have more crises, or more challenges in the future, and proactively preparing our economies and societies now rather than reactively embracing what is already on offer to us is simply not a viable option.

Crisis scenarios such as the global pandemic we face are at the extreme end of the spectrum, however Distributed Ledger Technology has the potential to weather turbulent times of all types. For example, in the face of the adversity we have all been burdened with this year, the Gibraltar regulator has had more applications in the first period of this year than in the same period of last year, signalling an ever-increasing appetite towards this groundbreaking technology during times of crisis.

We have been preparing for a potential scenario of a No-Deal Brexit. In any scenario involving Britain’s departure from the European Union, we are geared to supporting our burgeoning network of impressive DLT projects and companies based here, ensuring business continuity. Brexit will undoubtedly have an impact on Gibraltar, but the decentralized nature of DLT businesses will allow operations to continue as normal. We are wholly dedicated to continuing to push and invigorate our DLT community while making every effort to remain positive, hopeful and fully committed to facilitating the realisation of the immense benefits that this technology brings to Gibraltar and the world as a whole.

Longstanding change will impact how we face whatever comes next

Across the world, government responses to the pandemic have proven that vast change can take place in a relatively short period of time. Longstanding change will impact how we face whatever comes next, and it is essential that regulators and governments take action now to prepare ourselves for the future. The regulation of the DLT space is an equitable, common-sense and overdue option that should be seriously considered by governments all over, and when doing so, it is necessary to bring the experts to the table. By hearing every voice in the room, the best solutions to our world’s most pressing problems may be uncovered, and we can build a future economy together that is more efficient, transparent and fair for all.

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How a bespoke framework is giving the Rock a competitive advantage

By Nick Cowan, CEO of the GSX Group

When it comes to regulating companies utilising Distributed Ledger Technology (DLT), the old fable of David and Goliath is more relevant than you might think. Large nations and economic blocs are currently lagging behind smaller countries when it comes to regulating DLT firms. Several small jurisdictions, including Gibraltar, have taken the initiative, and the benefits are already visible to all. By taking advantage of its small size, championing regulatory flexibility, and demonstrating an aptitude for implementing innovative and prudent frameworks, the Rock currently has a distinct competitive advantage over international counterparts.

Gibraltar has a rich history of embracing emerging technologies, rising to the forefront of the gaming industry through comprehensive licensing processes. The jurisdiction has found novel ways to apply regulation to these emerging industries, by putting principles at the heart of regulatory oversight.

 Bespoke frameworks

The Gibraltar Betting and Gaming Association (GBGA) has a strict set of regulations overseeing companies keen to do business there and such frameworks have paid dividends for popular providers like Ladbrokes and Betfair. By taking a proactive approach to regulate emerging industries with bespoke frameworks, Gibraltar is setting itself up for success. This proactive approach also extends to the burgeoning blockchain space.

A principles-based framework to regulate DLT enabled companies was first introduced by the Gibraltar Parliament in October 2017, in response to growing recognition that blockchain was heading for mainstream adoption. The framework focuses on the transmitter, not the tech itself. In other words, it regulates any firm carrying out the use of DLT, or blockchain, for storing or transmitting value belonging to others. The regulation is built around nine core principles and, as part of the application, each company has to demonstrate to the regulator how it addresses, and complies with each principle.

 The Rock’s closely-knit community

This is a novel approach, one which satisfies the prudential tendencies of regulators while allowing for a degree of flexibility for projects to breathe. Regulating in this manner has allowed Gibraltar to move quickly, striking a balance between prudent and flexible regulation enabled, in part, by close ties between industry and policymakers. The Rock’s closely-knit community is conducive to cooperation between government, business, and the regulator, helping to build greater understanding of business needs. This strong engagement has helped direct the formation of regulation that provides flexibility for guidelines to evolve, and speeds up the regions ability to accomplish goals, and respond quickly to a fast-moving industry like FinTech.

If a larger area attempted such a flexible regulation, it would likely require a lot more consultation and insight from stakeholders with a wide number of needs. This could take years.

In Gibraltar however, important government-led initiatives can move in tandem with technological advances, as seen with the formation of initiatives like the Gibraltar Association for New Technologies (GANT). The organisation encourages the building of relationships between the authorities and blockchain firms. The government has also created a working group called New Technologies in Education (NTiE). The project, a joint initiative between the Government, private sector, and the University of Gibraltar, aims to address the growing need for blockchain-related skills. The NTiE aims to curate educational courses that will give employees and specialists required industry know-how. This flexibility, to listen to enterprise and react speedily, is unique in a global context.

It would be naive to say that Gibraltar is the only small jurisdiction taking advantage. Several others in Europe have taken steps to become crypto-friendly territories, including Switzerland, Malta, and Estonia. Last year, Malta adopted a welcoming regulatory framework for crypto businesses, and Estonia has licensed hundreds of exchanges and wallet service providers since it introduced a licensing regime.

Looking forward, Gibraltar is working hard to be in front of what it sees as a material evolution within capital markets, smart securities. The jurisdiction has worked hard for two years building its proprietary blockchain technology to enable the issuance and secondary trading of smart securities, realising efficiencies beyond what was previously achievable. Lowering the cost of capital to issuers, reducing the cost of execution to investors, whilst reducing reconciliation costs and capital to intermediaries will be a paradigm shift that will redefine markets.

 Blockchain powered finance

Inclusion and empowerment will become the mainstays of tomorrow’s markets and Gibraltar has embraced DLT into its core technology framework to enable the vision to become a reality. The progress, in part, is due to the supportive embrace of this emerging nascent technology, supporting a new era of blockchain powered finance.

Smaller jurisdictions are leading the way in terms of regulating firms using blockchain, and Gibraltar is a prime example of this fact. Being one of the first jurisdictions in the world to introduce a regulatory framework for DLT companies, coupled with its nimble economy and regulatory flexibility, it continues to enrich its history of implementing innovative and prudent frameworks around nascent industries, giving the Rock a real edge on the global stage.

The post A framework that builds for the future appeared first on Gibraltar International Magazine.

A spectacular crash in cryptocurrency prices at the end of last year, had a subsequent roller coaster effect and a decline in digital business crowd funding (ICOs), but the digital financial services sector is still going strong, Ray Spencer reports

Gibraltar launched the world’s first blockchain / Distributed Ledger Technology (DLT) regulation in January 2018, and is now gradually increasing its licensing activity. The jurisdiction is poised again to trail blaze with the launch of token sector regulation, albeit a year later than anticipated.

In 2018 Q1, 30 DLT license applications reportedly were received. By mid-April this year only seven firms had been approved and almost all were cryptocurrency exchange-related, including some of the world’s largest such enterprises!

Nicky Gomez, Gibraltar Financial Services Commission (GFSC) head of risk & innovation, said some were aimed at start-up businesses and others at established operations that had “decided to run its [sic] virtual asset business in a regulated environment”.

He explained that businesses using DLT to store or transmit value belonging to others and operating from Gibraltar before January last year, were given three months to submit an application if they wished to continue trading under transitional arrangements. A robust assessment to ensure applicants comply with the nine regulatory principles is required before a DLT Provider licence can be issued.

“In a principles based regulatory regime, an open dialogue and collaboration between the regulator, applicants and their advisors is necessary in order to ensure applicants have adequate controls to meet the nine regulatory principles and outcomes that will deliver protection to customers, Gibraltar’s reputation and reduce the potential for financial crime”, Gomez asserted.

Regulation new to techies

GFSC technical specialist, Nathan Catania, pointed out: “In particular, some applicants are from tech-based businesses and are not used to dealing with regulatory requirements in their operations, which makes the need for transparency, dialogue and clear communication of our expectations even greater.”

There were a further nine applications with in principle decisions pending a full DLT license “and there are [still] more in train”, Gomez noted. However, he revealed: “To date, a few firms, have for different reasons, decided to withdraw their application at different stages of the authorisation process”.

LMAX Digital, an electronic exchange formed in May 2018 dealing in foreign exchange (FX) and crypto currencies for institutional clients, revealed in March that it was awaiting DLT license approval. Parent company, LMAX Exchange Group, has traded over US$12trillion at multiple FX trading venues worldwide. Others, such as TokenMarket and CEX.io, have also received in-principle decisions from GFSC.

The earliest applications took over six months to gain approval, double the time originally expected. According to Paul Astengo, the government-supported Gibraltar Finance senior executive with responsibility for innovation and technology initiatives: “A lot depends on the quality of the applications the complexity of the proposed activity and how well-presented the cases are; they’re being processed more quickly and generally it now takes closer to three months. It has been a learning curve for us all, including applicants, practitioners and the GFSC.”

DLT beyond finance

Recent DLT-license applications are challenging areas of blockchain activity other than being crypto-related. Astengo confirmed: “There are applications in course that are concerned with other areas of industry, not just financial services, run by advisory firms to aid, for example, detailed business planning that previously might have involved hiring a human management consult to consider.”

A year ago, Gnosis was attracted to set up headquarters in Gibraltar after its US$12.5m token sale, and established the Olympia prediction platform to “aggregate information about the expected outcome of a future event” from climate change, gauging the price of a piece of art before auction, or forecasting epidemics”.

Minister for commerce, Albert Isola, enthused: “There is a real vibrancy emanating from Gibraltar’s growing blockchain ecosystem.” He added: “We have set a high bar for prospective DLT providers. We are committed to upholding the highest standards in our expanding blockchain ecosystem, and remain deeply committed to our principles-based approach to DLT regulation.”

Fly in ointment

The fly in the ointment has been the sudden crash in digital currency prices last year. In November, for example, crypto currency valuations fell by a third in one week and have been volatile since.

In response to late-March questions, Nick Cowan, chief executive of Gibraltar Stock Exchange (GSX) Group, observed: “Having been a trader in the 1987 as well as the 2008 crash, I have seen the financial industry go through many significant bear and bull markets, such that 18 months ago Bitcoin, [the largest crypto currency by far] was at the same price it is today.

“What happened in between was a combination of greed (versus fear) and simple hype”, he opined adding that most major exchanges saw a drop in crypto business volume and prices down by 90% since the peak.

Cryptocurrencies form a major part of GSX Group activity, but since receiving its DLT license in November, business had grown, “particularly with our insurance cover for theft from our wallets”. He cautioned: “When markets suffer the type of falls seen, many people who entered the market seeking gains (without understanding the underlying technology, perhaps) naturally withdraw or move on.”

Coinfloor trades Bitcoin for institutional and ‘sophisticated investors’, and in 2013 became the UK’s first crypto exchange, and in October 2018 it gained a Gibraltar DLT licence.

In January, the firm reportedly was “scaling back activities for now”, a move described by industry pundits as “sensible” and “responsible to protect the long-term future of the business”. Coinfloor expects to return to its previous level of activity by the year-end.

Set up in the US in 2007 “to reduce dependency on traditional financial institutions” eToro is now a market-leading internet trading platform and gained its Gibraltar DLT licence in December, along with Huobi Technology (Gibraltar), which is part of a leading Singaporian blockchain group boasting over US$1trillion turnover from users in 130+ countries. Huobi said: “It’s no secret that we think that well-designed regulatory applications, from liquidity to safe storage with military grade security layers”.

“Among other benefits, our [Gibraltar] DLT license will allow us to open doors to more institutional investors who were previously unable or unwilling to get involved in an unregulated sphere,” Li stated.

First Digital Assets Group, operating as Eppur Group, gained its DLT license in March to “create building blocks for blockchain applications, from liquidity to safe storage with military grade security layers”.

Coinsilium Group, a blockchain investment and advisory firm, in March moved its core operations from London to reduce operating costs and put more resources into investment activity and advisory services. Executive chairman Malcolm Palle, relocated to Gibraltar to recruit staff before summer, and declared: “It’s not just regulation that is attractive – it is also because banking is better and the jurisdiction is ahead of the curve”.

Palle said Gibraltar’s private Turicum Bank “has a good understanding of how DLT and crypto companies work and is more open-minded to the sector, whereas many other banks have a blind spot with regard to blockchain”.   Firms involved with cryptocurrencies have experienced widespread difficulty in obtaining bank accounts in main financial jurisdictions, sometimes instead choosing eastern European jurisdictions and Euro bank accounts.

“It’s about the banks being comfortable on where the money has come from to satisfy their know-your-customer (KYC) and anti-money laundering (AML) obligations. With money into businesses arising from cryptocurrency activity, the banks need comfort on the source of funds,” Palle observed.

While State-owned Gibraltar International Bank (GIB) is accepting of crypto businesses, its reciprocal British bank, [the Royal Bank of Scotland], is not and reportedly refused last year to process orders from locally based crypto firms.

GIB chief executive, Lawrence Podesta, told Gibraltar International: “It is still very difficult to engage with institutions [that] are willing to entertain payment channels, in and out, for any monies related to FinTech business.” He disclosed: “A number of meetings with some institutions were arranged in April. I am optimistic and hopeful that we can revive this area of activity within the next few months.”

The Gibraltar Blockchain Exchange (GBX), which runs an initial coins-offering marketplace as a subsidiary of Gibraltar Stock Exchange (GSX), gained its DLT license last November reportedly after 180 days of preparation. GSX Group now employs 100 people – 70 at its Gibraltar headquarters, and the rest in London, Hong Kong and Singapore.

Blockchain transformational

Bitcoin is not legal tender in Gibraltar. It will not regulate the currencies, but will license firms that have business in or from Gibraltar, for the use of DLT for storing or transmitting value belonging to others. The jurisdiction’s consistent view is that the underlying blockchain technology is what is transformational.

Nick Cowan, GSX Group chief executive, declared: “Gibraltar has found the right blend of sensible and supportive regulation, which has helped position the jurisdiction as a lodestar for the global crypto currency space” and suggested: “Crucially, here in Gibraltar there has been a realization that the pursuit of innovation should never come at the expense of sustainability and long-term development.”

There is continuing interest from operators in becoming a licensed DLT provider, insisted Peter Howitt, director of Gibraltar’s Ramparts Law, “though the bear market for crypto has made it tougher for many operators to afford the licensing and set up costs given the drop in revenue and also asset value for those holding their own assets in crypto!”

There is no harmonised approach at EU level to the regulation of virtual currencies or the use of blockchain technologies in areas that overlap with more traditional financial services.

Gibraltar’s planned Tokens regulation, including initial coin offerings (ICOs) – used across the world to crowdfund multi-millions of pounds for new and established businesses – was expected in mid-2018, but the slump in crypto market activity of all types contributed to make the launch less urgent.

A Tokens Bill was eventually published in February and after industry consultation it is now expected to take effect in May 2019. Tokens offerings will need to be made through licensed ‘authorised sponsors’, who will be required to ensure compliance to the regulator’s principles and adherence to authorised codes of practice for each issue.

Research from Atlantic NeoTechnologies (ANT), a specialist service company for digital currencies, tokens and ICO projects, suggests ICO funds raised through Gibraltar rose from around US$40m in Q3 2017 to US$340m by end-2018.

While crypto exchanges such as GBX [which itself attracted over US$27m in a seven day February 2018 token offering] accounted for a quarter of Gibraltar’s ICO activity, other areas showed “even more signs of acceleration and diversification” across 15 sectors, including commerce, healthcare, infrastructure and energy, according to Alain Chevee, chief executive of ANT, with offices in Geneva, Luxembourg and Gibraltar.

Chevee’s report on information website, fintech.gi, noted: “We see that Gibraltar is clearly a major player in terms of pro-ICO regulation, expertise and the number of ICOs in proportion to its size as a jurisdiction. The development of an ICO industry is undoubtedly an investment for the future of Gibraltar’s economy as the funds raised by ICOs will continue feeding and seeding projects, no matter how the crypto-currency industry evolves meanwhile.”

ICOs investment in future

But pointedly, Chevee stated: “The key relevant question now [is] whether Gibraltar will stay ahead of the curve in the future when bigger countries clarify their stance on ICO regulation and major banks and other actors enter into play!”

The test for Gibraltar’s DLT regime, and forthcoming tokens regulation – where it will be the first in the world – is the extent to which other jurisdictions accept those standards for Gibraltar licensed businesses operating in their countries. The UK does not regulate firms working with blockchain, or tokens offerings.

Ramparts in January told Lexology, an online news feed: “ Whether by regulation or cross-party industry agreement on a self- regulatory basis, it is expected that Gibraltar will take a lead in managing the risks and setting the standards that should be applied in this fast-growing [tokens] sector. Most jurisdictions (including the United States) expect a detailed case-by-case assessment of whether any such crowdfunding may constitute the offer of securities (including whether they constitute a form of investment fund).”

GSX believes that the future for capital markets rests with the tokenisation of securities, known as ‘smart securities’. “The efficiencies, cost reductions and instantaneous transferability can have seismic transformational effects as to how securities are traded, cleared and settled,” Cowan asserted.

To develop its own digital exchange, GSX Group established a joint venture subsidiary, Hashstacs Inc, last year in Singapore, with a team of 40+ developers to prepare its STACS Network to begin trading digital securities later this year.

Huobi revealed that now licensed, it is looking at “exciting possibilities for simplified and efficient fiat-to-crypto and crypto-to-fiat functionality” and also expects to roll out in the first half of this year “a concerted move into the regulated financial product space”.

Howitt noted that while “ICO’s have really died out… there is lots of focus on equity offerings with tokens (so called Security Token Offerings).” He advised: “Gibraltar can become a leader in the tokenised securities sector if we properly balance speed to market and reduced costs with necessary regulatory controls and supervision.”

Crypto funds are one area where tokenised assets are expected to make an impact and help revive Gibraltar’s traditional funds sector, which in recent years has not grown as expected.

In 2014, [the last year in which GFSC published statistics] there were some 180 funds strategies in operation, 88 being Experienced Investor Funds (EIFs), with roughly £2.5 billion of assets being managed, according to Gibraltar Funds & Investments Association (GFIA). Today there were around 75 EIF fund strategies (including cells in PCCs), plus a number of private funds, association chairman, James Lasry, estimated

Crypto funds activity

“The sector has been contracting, but finally we have seen a steadying of that and we are launching some new funds, which is very good”, he remarked in early April.

Lasry, a partner in Hassans law firm, pointed out: “We are the only jurisdiction in continental Europe that allows the pre-authorisation launch of funds for experienced investors, even when they are sub-AIFM threshold. This is because our funds include two experienced investor fund directors, who are preapproved by the GFSC to ensure proper corporate governance.”

Amended legislation late last year allows non-residents to be authorised as EIF Directors, “because firms who have large funds businesses may already have their own cadre of very well-qualified directors and they don’t necessarily want to use new directors who are unknown to them in order to set up in Gibraltar”, Lasry explained. “We encountered some objections to this when we were in Hong Kong on a number of seminars there, so this stumbling block has been removed.” The first applicant to benefit is understood to be a prominent compliance consultant with senior US and UK experience.

“Our regime is so flexible – there are no limitations on asset class unlike most other jurisdictions – so we have been able to set up crypto funds and we are looking at funds that invest in medicinal cannabis companies, provided of course, that those companies are lawful in the places where they are active”, GFIA’s chairman revealed.

Lasry’s firm had received a number of such enquiries, including three from one London law practice, and other GFIA members similarly had been approached. “We are also looking at exchange traded funds, which we feel can fit in with our legislation,” he added.

A GFIA Code of Conduct for crypto funds was established last year as the first of its kind worldwide and has received international acclaim, because although the principles of corporate governance are universal, there are scenarios that are specific to crypto funds that require specialist knowledge to set up.

The post The 2018 cryptocurrency crash has not halted growth appeared first on Gibraltar International Magazine.

By Nick Cowan, CEO, Gibraltar Blockchain Exchange (GBX)

Despite the downturn in the cryptocurrency market, the global blockchain landscape continues to build momentum, illustrated by the surging jobs market, the stream of high profile education offerings, and a range of government departments across the world pursuing applications of the technology. For too long, however, clear regulation has been the missing piece of the puzzle — placing a glass ceiling over the industry as a whole, stifling the progress of potentially landmark projects, and dissuading others from pursuing decentralised innovation.

As the wider blockchain ecosystem continues to evolve at a fast pace, the importance of regulation has never been more pronounced. The full promise of the blockchain industry will be delivered with a principles-based regulatory framework in place, providing much-needed guidance for companies entering the market. This would help them effectively plan and develop the projects that give expression to the spirit of decentralisation at the heart of this movement.

So what are the arguments for principles-based regulation?

For all of the successes within the blockchain eco-system, there have been failures. Failures that perhaps could have been avoided if the right regulatory framework was in place to guide companies through challenging times, or prevent premature projects from entering the market. Between the start and midpoint of 2018, over 1,000 crypto projects ceased operations, a remarkable figure that highlights the volatility of the space, but perhaps more importantly, underlines the need for strong leadership around regulation.

A principles-based approach to regulation has helped the blockchain landscape develop in Gibraltar. The country is showcasing the benefits of creating a sensible and sustainable cryptocurrency and blockchain regulatory environment. In January of this year, Gibraltar became the first jurisdiction to introduce a purpose built DLT regulatory framework and subsequently, the Gibraltar Financial Services Commission (GFSC) granted Distributed Ledger Technology (DLT) licences to a number of companies that use DLT.

The progressive nature of this regulatory approach has enabled a wide variety of projects to flourish. The GSX Group has experienced first hand the advantages of a supportive and flexible regulatory framework, after becoming the world’s first stock exchange that also owns and operates a regulated cryptocurrency exchange. There are around 170 stock exchanges worldwide.

Policymakers in the jurisdiction have highlighted the importance of legislation that is robust, but also sensibly flexible, nurturing the innovative efforts of the countries flagship platforms and budding projects. The cohesion between government and industry, melded together by a shared vision for mainstream decentralisation, has helped position Gibraltar as one of the world’s most advanced blockchain and crypto friendly jurisdictions. The efforts of the government are being rewarded in the form of an influx of blockchain projects attracted to the jurisdiction’s supportive environment.

The introduction of the regulatory framework in January has opened the country’s doors to companies utilising blockchain and DLT, giving them the opportunity to apply for a license from the GFSC. This wave of momentum comes at a time when world leaders appear to be stepping up efforts to build foundations for a comprehensive regulatory framework. The notion of developing international standards to regulate cryptocurrencies, as outlined at the G20 meeting in Buenos Aires, is another step in the right direction for the blockchain and crypto space. Similarly, while speaking at a recent fintech conference in Singapore, Head of the International Monetary Fund Christine Lagarde encouraged governments across the globe to consider developing their own cryptocurrencies – a strong vote of confidence for the prospect of cryptocurrencies ascending into mainstream society.

Clear regulation

Whatever shape regulation takes, it is imperative that its implementation is not rushed. Clear regulation will help reassure a new swathe of participants who have been hesitant to enter the market and instil a sense of confidence among investors around the credibility and security of the space. Gibraltar as a jurisdiction can showcase a framework that revolves around the needs of industry, raising the glass ceiling and helping the blockchain space develop with boundless energy.

The post Principles Based Regulation – Raising the Glass Ceiling on the Blockchain Industry appeared first on Gibraltar International Magazine.

by Joey Garcia ISOLAS LLP

Most people will have, by now, heard of the proposal to introduce a regulatory framework that is intended to capture and regulate firms that use distributed ledger technology (DLT) for the transfer or storage value belonging to other people. The response to this principles based approach to regulation of the emerging, but very quickly developing, space has been fantastic.

“Operators…crave a regulated framework”

Many operators in this area crave a regulated framework for their businesses and operations. Creating a distinguishing layer between a professionally run business and a ‘garage operator’ in this space is critically important for the development of the industry. The security of knowing that you are dealing with a regulated business cannot be underestimated. While regulation may always remain technology neutral, and while Gibraltar is not seeking to somehow attempt to regulate any form of fully decentralised protocol, it is the operators in this space, the ones that are providing intermediary functions that invariably have touch points to the technology, and the underpinning value of the information ‘stored’ on a distributed ledger, that need to be professionally run.

Regulation will bring with it a level of consumer protection that has not necessarily existed in this space before but that is not to say that regulation will protect any person or individual from the underlying risk of exposure to, say, any particular crypto asset but it will ensure that the entry and exit points or ramps are regulated, and that those who are building the infrastructure and businesses using the underlying technology (for certain purposes relating to transfer and storage of value) are well run operations.

I must admit that when we commenced an initiative to provide a framework for this activity around 3 years ago, it was very much virtual currency focused. Today, the proposed framework is thankfully much wider. The speed of evolution in the use and application of this technology is quite incredible and this is why I personally feel that the approach we are taking in Gibraltar is correct and intentionally wide.

Token Sales…what’s a token?

One of the use cases of the technology has been the recent explosion of ‘token sales’ or ‘Initial Coin offerings’ (ICO’s). In ultra-simple terms, let’s consider the recent Uber licensing issue in London.

Let’s consider a case where I want to create a new business to fill this gap in the UK market. I want to call this the SKuber service. For the purposes of the example I will disregard any IP/copyright issues, or licensing issues around the activity. Essentially I believe that the SKuber service is going to be better, faster, more reliable than Uber or actually any other taxi service in London. One of the reasons for this is that it will be cheaper for both the passenger and more profitable for the driver because I will be ‘disintermediating’ the need to the centralised company ‘Uber’ and allowing the driver to receive more of the revenue, while allowing the customer to also pay less by way of fees. People will be able to use the service and interact directly between themselves in a secure way without the need for me to be involved.

To support the Skuber service I am going to create a new ‘token’. This token is basically the internal Skuber currency. You can use the service and pay the driver but only with this new SKU token. To build the Skuber service and infrastructure I am going to pre-sell SKU tokens, initially only to professional investors who are taking more of the enterprise risk, but ultimately to the public who want to use the service and in that way create a network of interested users in my service. People can choose to buy the token now at a set price during a public sale of that token (essentially the ICO) or further down the line through a number of potential
mechanisms or even secondary markets that will develop for the SKU (and which are not necessarily controlled in any way by Skuber).

What I am aiming to do is to build supply and demand for the new alternative taxi service and then use the proceeds of this sale to build the Skuber network (build technical infrastructure, develop the application, incentivise drivers, subsidise car purchases, obtain licenses etc etc). This is of course a very very simple case scenario and there are a multitude of issues that would need to be considered in the above kind of set up, but at a high level this is the principle behind the creation of these new tokens. There are of course platforms that are also infinitely more complex than the taxi service example. Decentralised computer storage, news, prediction market platforms, credit scoring, copy trading or portfolio management, location services, web browsers, identity systems etc etc . The token can have almost any functionality (and well beyond the function of being a simple exchange of value like bitcoin for example). This ‘smart contract’ functionality can allow for logic to be coded into the blockchain creating the ability to replicate many (automatically executing) business processes and the token can represent any functionality desired by the developer

Security vs Utility – regulated or not?

The opportunity for a ‘DLT Firm’ to raise funds in this way is a relatively new phenomenon. However, in the last year more funds have been raised through this crowdfunding mechanism than have been allocated by the entire venture capital investment community. This is not without its complications though, and there are a multitude of risks relating to this activity, in particular, the treatment of the token by different regulatory authorities around the world. Selling something that may be treated as a form of equity, debt, a derivative, option, a form of e-money or an arrangement that may constitute a collective investment scheme arrangement will bring the token within the existing ‘legacy’ legal and regulatory frameworks that exist around the world (and which are by no means consistent). In essence, ‘form will be disregarded over substance.’ Similarly the tax treatment and in particular VAT implications for delivery of a token into another jurisdiction can also be complex.

The post DLT: regulation, applications and token sales 101 appeared first on Gibraltar International Magazine.