The Government of Gibraltar is weighing up legislation to regulate initial coin offerings (ICOs) and their secondary markets.
In an announcement by the Gibraltar Financial Services Commission (GFSC) today, the financial watchdog for the British Overseas Territory said the government and the authority are jointly developing legislation for blockchain-based token offerings in the territory. The decision follows a discussion by the government with local stakeholders in December after an initial September statement outlined authorities’ intent to introduce a ‘complementary regulatory framework covering the promotion and sale of tokens.’
“A new regulatory framework for DLT which will become operational as from January 2018 will regulate the activities of firms, operating in or from Gibraltar, that use DLT to store or transmit value belonging to others, such as virtual currency exchanges,” an excerpt from the statement said at the time.
And so, it has proved, with work toward regulatory draft laws currently underway.
Specifically, the draft laws will push for the regulation of ICO operators’ promotion, sale and distribution of tokens; the secondary trading markets related to these tokens located in the territory and businesses offering investment advice related to tokens in Gibraltar.
As a result, the regulations will mandate ICO issuers to follow disclosure rules that includes ‘adequate accurate and balanced disclosure of information’ to all prospective token buyers. Further, the regulations will also establish mechanisms to prevent financial crime.
According to Gibraltar’s commerce minister Albert Isola, the regulatory move will coincide with authorities’ intent to protect consumers and safeguard companies offering token sales in Gibraltar.
GFSC senior advisor on distributed ledger technology (DLT) Siân Jones added:
“One of the key aspects of the token regulations is that we will be introducing the concept of regulating authorised sponsors who will be responsible for assuring compliance with disclosure and financial crime rules.”
Notably, the government’s announcement also hinted at the prospect of regulated investment funds dealing with cryptocurrencies and ICOs, a development that is currently under review.
The bill is expected to reach the Parliament’s floor sometime in Q2 2018. If passed into law, Gibraltar will prove an attractive destination for businesses weighing up token sales in the coming months and cryptocurrency investment funds in the future.