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FinTech
Gibraltar Tames the Wild West
By Daniel Pitaluga, Senior Associate at Abacus Financial Services Ltd
What started out in January 2017 as another ordinary year, in the aftermath of a unpredictable 2016 which saw Donald Trump elected US President and in which Britain voted to leave the EU, slowly evolved into a revolutionary era with the rise of a phenomenon understood properly only by an elite of tech experts but which would, in a similar fashion to Trump and Brexit, shape the future of the financial world.
Bitcoin
This was, as you may have guessed, the emergence of cryptocurrencies, more popularly referred to loosely by the name of the first and leading cryptocurrency, Bitcoin. In January 2017, the price of a Bitcoin was around $950 and as the world started
whispering about its potential, people flocked to any cryptocurrency exchange willing to accept them so they could get their hands on some precious and seemingly valuable Bitcoin.
Whether it was genuine investors who saw the potential of cryptocurrency as a new asset class, fraudsters who heard they could shelter money and make anonymous transactions, or anyone who heard of it as this year’s get-rich-quick scheme, the rush brought Bitcoin and blockchain technology directly into the global spotlight. By December, the price of Bitcoin had surged to over $20,000, representing a return for investors of over 2000% in under 12 months.
This, unsurprisingly, led to talk of an impending bubble bursting, one similar to the dot.com bubble in the late 90s, which would surely knock cryptocurrency off the grid once and for all and allow us to return to life before Bitcoin. This early period was a time when governments were unsure how,
or indeed if, cryptocurrencies could be regulated; when banks were terrified of the threat this new technology posed to their well-established and over-relied-on system; the rise of scam Initial Coin Offerings (ICOs); and people purchasing their cryptocurrencies on unregulated exchanges. It could only be described as the crypto wild west.
Regulatory framework
2018 ushered in a time of change, with many governments banning or curtailing the use of blockchain technology and anything related to it. There were, however, a few jurisdictions which embraced the change and saw the opportunities it might give rise to.
The Government of Gibraltar made the bold decision to try to be the first jurisdiction to release a regulatory framework governing the use of distributed ledger (or blockchain) technology (DLT). It was a move similar to that made at the turn of the millennium when
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Gibraltar International
www.gibraltarinternational.com