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Gibraltar Regulator Updates Blockchain Regulation

The Gibraltar regulator has updated the Jurisdiction’s distributed ledger technology regulation. Gibraltar’s DLT legislation was introduced in January 2018 as a regulatory framework for businesses using blockchain or DLT. In Gibraltar, DLT permission holders must comply with the same standards as banks and other financial services firms. The amendments distinguish between lower and higher risk virtual assets.

The changes to Gibraltar’s framework have been designed to adapt to latest Financial Action Task Force (FATF) recommendations relating to virtual asset service providers (VASP).

“Today marks another milestone moment for Gibraltar’s thriving DLT/VASP ecosystem, as we refine the regulatory framework that guides companies through the licensing process and beyond,” said Gibraltar’s Minister for Digital and Financial Services, the Hon Albert Isola MP. “Our jurisdiction’s agility has been a hallmark of our success to date, with a progressive open dialogue between regulators and industry figures helping to craft a framework that satisfies natural regulatory prudence while allowing for a sensible amount of regulatory latitude to help projects innovate properly.”

13 firms operate under Gibraltar’s DLT framework, including the likes of eToro, Huobi, Xapo, LMAX, Bitso, Gnosis, and more. 

“Prospective licensees must demonstrate a clear appreciation of the nine core principles underpinning the regulatory framework, covering areas such as corporate governance, capital adequacy, risk management, customer care, and in due course, market manipulation,” said Minister Isola. “Other essential prerequisites include thorough internal risk management strategies, robust corporate governance structures, and well-defined protocols, with secure checks in place to ensure the protection of clients’ assets is prioritised. With a finely tuned DLT regulatory framework informed by industry and market insights, Gibraltar is even more equipped to steadily broaden our DLT community and continue Gibraltar’s strong arc of economic growth post-pandemic and BREXIT.”

Gibraltar has legislated to regulate the operation of cryptocurrencies within its jurisdiction. It requires the registration of firms that use distributed ledger technology to store or transmit value belonging to others. In order to register with the Gibraltar Financial Services Commission, a firm must apply, and if the regulator is satisfied, a license may be granted to operate a business using distributed ledger technology. 

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