Gibraltar has unveiled on January 1 the world’s first Digital Ledger Technology (DLT) Regulatory Framework to protect cryptocurrency investors in the British overseas territory, announced the Gibraltar Financial Services Commission (GFSC).
The DLT Regulatory Framework, which was posted on GFSC’s website, lays out specific rules requiring companies engaged in the blockchain technology to apply for a license with them.
“The DLT framework positions Gibraltar as a jurisdiction which facilitates innovation, whilst ensuring it continues to meet its regulatory and strategic objectives, and understands the modern need for robust and speedy interaction with regulators in this fast moving area of business,” the GFSC pointed out in a written statement.
The GFSC added that the framework would apply to activities related to the usage of distributed ledgers which are not currently covered by other regulations.
Nicky Gomez, head of Risk and Innovation at GFSC said his office is excited to “finally welcome applications from DLT Providers” and expects his team “to be very busy in the coming months.” The DLT framework is the result of close collaboration between the financial services industry and the Government of Gibraltar, he added.
No Fast And Simple Rule on Cryptocurrency
According to the GFSC, its primary objective is to protect consumers and the reputation of Gibraltar when considering any license application and in its supervision and enforcement functions.
With this in mind, the regulatory body is adopting a flexible approach when dealing with novel business activities, products, and business models, such as the blockchain technology. Regulatory outcomes are better achieved by applying the principles of the rules than rigid enforcement.
“This is because for businesses based on rapidly-evolving technology such hard and fast rules can quickly become outdated and unfit for purpose,” GFSC added.
Gibraltar Releases Draft DLT Framework
Gibraltar first published a draft DLT framework on October 2 to reinforce its status as a financial center by encouraging a business-friendly regime for cryptocurrency startups. Although the GFSC originally sets the enforcement of the DLT framework on January 18 this year. The final version of the new rule took effect on New Year’s day.
In December 2017, the Legislature of Gibraltar approved a bill to update the territory’s financial services regulations. The bill laid the groundwork for the new regulation involving the cryptocurrency space.
GFSC Chief Executive Samantha Barass commented then that the regulatory framework demonstrates how the territory’s regulators can “keep up to date with technology without stifling innovation, protect consumers and create a well-regulated safe environment in which financial technology can flourish."