Friendly regulations make Gibraltar a leading space for Blockchain companies

Gibraltar is among the leaders in terms of blockchain adoption due to its openness to innovation and creativity, the nation's minister for digital and financial services said. By developing a proper regulatory regime for blockchain-based companies and client protection at the same time, the country has attracted more than a dozen such businesses.

Albert Isola, Gibraltar's Minister of Digital and Financial Services, I speak recently on the nation's position on Distributed Ledger Technology (DLT). He pointed out that it all started six years ago. At the request of the private sector, the government decided to establish a working group to explore the potential merits of blockchain adoption and how to regulate it.

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As such, Gibraltar became “the first jurisdiction to have a DLT legal framework to license and oversee companies in this space,” Isola explained. It’s called DLT regulation in Gibraltar and consists of “The Nine Principles.” According to Isola, these include corporate governance, suitability and ownership, capital adequacy, security arrangements and more.

He added that the DLT space is moving and expanding rapidly. Therefore, the government granted the regulator “an element of discretion on how to regulate it.” Isola also mentioned that cryptocurrency regulation was also on the table. But the government “concluded that it was too difficult to do so safely.”

We have all the anti-money laundering [AML] protocols in place and we were the first jurisdiction to extend the Asset of Crime Act (POCA) to token sales. Protecting the customer has been central to our thinking in developing the regulatory regime and ensuring that it is fit for purpose.

Mainly due to the nation's open approach to blockchain adoption, 15 companies are now licensed and regulated from Gibraltar.

These are long-term, sustainable companies that take their reputations as seriously as we do. The dominant philosophy is that they must be quality firms, have their mind and management in Gibraltar and be licensed. They are subject to the same supervisory regimes as banks. O financial services companies, such as on-site inspections and AML process assessment.

Isola also outlined the government’s belief that the technology has broad potential. It could be a solution to problems in many different sectors, such as financial services, healthcare, education, etc. Once other countries decide to get involved, the adoption rate of DLT will increase, he added. However, when they also start using blockchain, “it will need to be regulated.”