Gibraltar updates regulatory status for DLT providers

The Gibraltar Financial Services Commission (GFSC) has announced a number of important updates to the jurisdiction’s bespoke Distributed Ledger Technology Providers (DLT) regulatory framework Guidance Notes.

The updated Guidance Notes aims to offer further clarity on key areas while adapting to the fast-moving industry.

The guidance also includes Financial Action Task Force (FATF) recommendations relating to virtual asset service providers (VASP) activities, in what is often described as the Travel Rule.

Gibraltar’s Minister for Digital and Financial Services, the Hon Albert Isola MP, said: “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.

“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.”

The consultation process began last November and included the Gibraltar Financial Services Commission (GFSC), Gibraltar Association for New Technologies (GANT), and DLT Provider licensees who have been fully consulted on the amendments to the framework.

Gibraltar has been one of the leading nations in terms of its regulatory approach to cryptocurrencies and blockchain technologies, arguably dethroning Malta that was seen as the ‘blockchain island’ in 2019.

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Currently there are 13 licenced firms operating under Gibraltar’s DLT framework including large international groups such as eToro, Huobi, Xapo, LMAX, Bitso and Gnosis. There is also several applications currently in progress.

Minister Isola added: “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.

“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. We look forward to welcoming more quality projects into our blockchain ecosystem in the months and years ahead.”

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