The Gibraltar Financial Services Commission (GFSC) has become the latest government financial regulator to issue an official statement regarding the regulation of initial coin offerings (ICOs). The release indicates that Gibraltar will incorporate ICO regulations into its “new regulatory framework” for distributed ledger technology, which is expected to come into effect in January 2018.
Gibraltar Is Exploring Developing A “Complementary Regulatory Framework” Regarding ICOs
The GFSC’s statements on ICOs are welcoming, suggesting that the territory will move to develop a permissive regulatory apparatus pertaining to initial coin offerings. The release states that the GFSC is “considering a complementary regulatory framework covering the promotion and sale of tokens, aligned with the DLT framework.”
Presently, the GFSC defines ICOs as “an unregulated means of raising finance in a venture or project, usually at an early-stage and often one whose products and services have not yet been significantly designed, built or tested, [let] alone made operational or generating revenue.” The GFSC consistently highlights the unregulated nature of the current ICO industry, stating that initial coin offerings are “often used by start-ups to bypass the rigorous and regulated capital-raising process required by venture capitalists or financial institutions.”
The GFSC indicates that it will seek to regulate the issuance of securities through ICOs, stating that when “tokens represent securities… their promotion and sale are regulated as such.” Gibraltar’s financial regulator also warned investors of the risks associated with initial coin offerings, stating that “new ventures are highly-speculative and risky, and early-stage financing is often best undertaken by experienced investors.”
Gibraltar’s Government Has Made Consistent Moves Toward Developing Permissive Cryptocurrency Regulations Since 2016
In May 2017, Gibraltar’s government published a document outlining a number of proposals for the development of a regulatory framework for distributed ledger technology, drawing off research conducted by the state-appointed Cryptocurrency Working Group the preceding year. The document stated Gibraltar’s intention to develop “an efficient, safe and innovative regulatory apparatus” under the guidance of the GFSC – describing the primary goal of the legislation as “encourag[ing] Gibraltar’s economic development while providing safeguards for consumers”. Gibraltar’s regulatory proposals also expressed that the government is seeking to engage representatives of the distributed ledger technology industry in the development of its new regulatory apparatus.
Since releasing its draft proposals in May, Gibralter has attracted investment from a number of cryptocurrency companies, including Xapo and Coinsilium. Last month, Gibraltar’s Stock Exchange announced plans to integrate blockchain technology into its operational processes. Gibraltar also became host to a bitcoin exchange-traded instrument (ETI), which began trading on the Gibraltar Stock Exchange in July 2016.
Do you think Gibraltar will continue to encourage investments from distributed ledger technology and cryptocurrency companies? Share your thoughts in the comments section below!
Images courtesy of Shutterstock, fsc.gi
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