What has happened?
Gibraltar has launched the world’s first regulatory framework for blockchain technology.
What does this mean?
The Gibraltar Financial Services Commission’s (GFSC) DLT Regulatory Framework came in to effect on 1 January 2018.
This means that firms in Gibraltar that use digital ledger technology (DLT) to store or transmit value belonging to others now have to apply for a licence from the GFSC.
The new framework hinges on nine principles designed for blockchain applications that companies must adhere to, namely: honesty and integrity; customer care; adequate resources; effective risk management; protection of client assets; effective corporate governance; systems and security access; financial crime prevention; and resilience.
The authorisation process for DLT businesses is in three phases and the GFSC has indicated that it should take three months to assess an application.
The first stage is a pre-application engagement to discuss the business model and type of activity and/or services the firm wishes to provide in or from Gibraltar.
The second phase is an initial application assessment during which the GFSC will assess, within two weeks, the inherent risk and complexity of the proposed business and provide feedback ahead of the final stage.
A non-refundable fee of £2,000 has to be paid at this point, with full application fees being payable later and the amount of the subsequent annual fee varying according to the complexity and category assigned to the DLT provider.
The applicant will then be invited to deliver a presentation to the GFSC and, once a licence has been granted, an onsite visit will be completed.
The GFSC has also introduced transitional arrangements for firms that were already carrying on DLT activities in Gibraltar before the new regulatory framework came into force.
These firms have to apply to the GFSC by 31 March 2018 and can continue to operate while the GFSC is reviewing their application.
Nicky Gomez, Head of Risk and Innovation at the GFSC, said: “[We] expect to be very busy in the coming months, and are looking forward to working on some interesting and innovative ideas with applicants.
"Working closely and collaboratively with the financial services industry and the Government of Gibraltar has resulted in the GFSC becoming the first regulator to introduce a DLT Regulatory Framework – it is a very encouraging time and we are also looking forward to the challenge!”
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