Insights into Gibraltar’s regulation on cryptocurrency exchanges and ICOs

[OliverChassa]

Gibraltar is about to become the first juridiction with a fully regulated initial coin offering exchange. After publishing a proposal for a DLT regulatory framework in May 2017, the Gibraltar Financial Services Commission (GFSC) announced that the adopted legal framework will come into force on Jan. 2018. According to some opinions, the new regulation is considered flexible and appropriate for distributed-ledger technology businesses.

More concretely, what does this new regulation mean for blockchain start-ups? Here are some insights into this new regulation.
The regulation will apply to natural and legal persons that use the DLT for business activities engaged in “the transmission or storage of value belonging to others” and which are not subject to other existing legal regulations. Such business activities include, for example, centralised virtual currency (VC) administrators, VC wallet providers, trading platforms, VC exchanges, payment service providers, issuers of asset-backed tokens, pre-loaded VC, vouchers and wallets, and peer-to-peer gaming platform operators.
Furthermore, the new DLT legal framework will be based on 9 pillars, that is to say: Honesty and integrity,
fairness and clarity, maintenance of adequate financial and non-financial resources, risk management practices, protection of clients’ assets, corporate governance arrangements, secure systems and protocols, prevention of financial crime risks, contingency plans for winding down of business (for more details,please read: http://www.nomoretax.eu/gibraltar-legal-framework-cryptocurrency/ ).

All these moves have been paying off so far since the country managed to attract investments from several cryptocurrency-engaged companies.

However, it is important to note that some types of businesses related to VC fall outside the scope of the new regulatory frameworks, such as decentralised VC schemes (e.g. Bitcoin), DLT software developers, users purchasing goods and services with VC, and investment in VC for private purposes. It is also proposed that investment advice about VC will not fall within scope of the new DLT framework.

By having taken the lead on introducing such a regulation, Gibraltar will probably continue to be one of the leading offshore financial centre.

[Lipe490]

It is very strange such a country like Gibraltar regulating cryptos. I am not saying that this isn't a good new but It is kind smelling fiscal paradise. Just google about this country and you'll see a lot of tax evasion related news, and we know how easy is to hide your gains with cryptos. Maybe we can see more people starting their ICO in this country if their government make it easy to do.

[stomachgrowls]

It is very strange such a country like Gibraltar regulating cryptos. I am not saying that this isn't a good new but It is kind smelling fiscal paradise. Just google about this country and you'll see a lot of tax evasion related news, and we know how easy is to hide your gains with cryptos. Maybe we can see more people starting their ICO in this country if their government make it easy to do.

If their government would really have some motive then for sure they will really accept it without any hardship since they do know that they can able to benefit from its usage.As i have seen and search this place do really have an issue of tax evasion.If they do regulate and adopt it then its their choice but this kind of adoption would really have some dark purpose behind.

[deadsilent]

It is very strange such a country like Gibraltar regulating cryptos. I am not saying that this isn't a good new but It is kind smelling fiscal paradise. Just google about this country and you'll see a lot of tax evasion related news, and we know how easy is to hide your gains with cryptos. Maybe we can see more people starting their ICO in this country if their government make it easy to do.

Regulating ICOs is a mandatory move to implement these days. There are so many scam ICOs that scammed their investors. That's why theres so many skeptics about investing on ICOs. It also affects the genuine ICO projects that suppose to be successful.  That's why implementing regulation ICOs is a good thing. So only genuine and not shady ICOs are being endorsed there and allowed to operate there. It's also for the protection of investors. The ICO must comply with the standards of the government so they can't easily get away if they steal money from investors.

[iamTom123]

By having taken the lead on introducing such a regulation, Gibraltar will probably continue to be one of the leading offshore financial centre.

I am sure that soon Gibraltar would be known as the cryptocurrency and ICO hub in that side of the world. We should appreciate the fact that Gibraltar made it clear the parameters of the type of projects that can be granted approval to do business. There is a big potential for this industry and Gibraltar wants to be one of the first countries to experience those benefits. We should not be afraid of the challenges that can be encountered with a county legalizing exchanges and ICOs. I am hoping that Gibraltar made it sure that the regulations weed out scam artists while at the same time encouraging more and more players into the ICO industry.

[eithercharon]

Honesty and integrity is somewhat vague with the mechanism being presented knowing that there are history of Gibraltar's reputation about taxation.

[squatter]

Honesty and integrity is somewhat vague with the mechanism being presented knowing that there are history of Gibraltar's reputation about taxation.

My take is that it's risky to rely on Gibraltar as a haven from outside regulatory action, or pressure from regulators. Whatever the underlying cause, Visa recently shut down WaveCrest's access to the Visa network. They were issuing cards for Xapo, Bitpay, and others. WaveCrest is licensed in Gibraltar.

It's a toss-up. Nobody knows how any of this will play out. One example that comes to mind is Antigua and Barbuda's support of online gaming, including offering services to US residents in the face of the UIGEA passed in 2006. In the end, the WTO sided with Antigua and Barbuda against the US, and Antigua continues to lobby for hundreds of millions of dollars from the US for unlawful enforcement of the UIGEA against free trade agreements.

So I am very curious to see how this plays out:

The regulation will apply to natural and legal persons that use the DLT for business activities engaged in “the transmission or storage of value belonging to others” and which are not subject to other existing legal regulations. Such business activities include, for example, centralised virtual currency (VC) administrators, VC wallet providers, trading platforms, VC exchanges, payment service providers, issuers of asset-backed tokens, pre-loaded VC, vouchers and wallets, and peer-to-peer gaming platform operators.