Gibraltar Prepares For Regulation Of Cryptocurrency Exchanges And ICOs

On September 22, 2017, the Gibraltar Financial Services Commission (GFSC) published a statement regarding distributed ledger technology, token offerings, and governance. As explained in the agency’s release, in January 2018, the GFSC will institute a regulatory framework for distributed ledger technology (DLT). Firms based in Gibraltar or conducting operations in the country will need to adhere to these new guidelines. These directives specifically apply to entities that manage DLT-based assets on behalf of others, like virtual currency exchanges.

In May 2017, the GFSC published its Proposal for a DLT Regulatory Framework. From this early draft, it seems like the regulation will not apply to companies that have undertaken ICOs, but the GFSC is reportedly considering a corresponding set of guidelines to handle the “promotion and sale of tokens.”

Mirroring the statements of regulators from other governments, the GFSC wrote in Friday’s announcement that some tokens may qualify as securities – as such, those tokens will be governed by existing laws. The supervisory agency also clarified that tokens can function in other ways (e.g., as a method of accessing a good or service). ETHNews previously explored the different attributes and classification of coins, tokens, and securities. For now, tokens often fall into a legal gray area, so this distinction is a promising sign from another financial authority.

The GFSC closed its announcement with a cautionary note to would-be token investors. Listing concerns such as regulation, volatility, disclosures, and risk appetite, the agency warned that “new ventures are highly-speculative and risky, and early-stage financing is often best undertaken by experienced investors.” A notable tax haven, Gibraltar is nonetheless following in the footsteps of other countries (e.g., United States, United Kingdom, Thailand) that have been monitoring cryptocurrency developments.