The Gibraltar Financial Services Commission has finally published a draft of, what aims to be, the future regulatory rules and principles of Digital Ledger Distribution (DLT) when it comes to its commercial use. The regulations apply to any company that chooses to use the blockchain or any other digital ledger to keep records related to their functions as a firm.
These regulations come as a consequence of the growing influence of blockchain technology in the business world. Also, it comes from the studies conducted in many countries about the benefits and applications of this new technology.
The new wave of regulations and implementations of the blockchain by government agencies are born out of the need to understanding the blockchain, and to minimise the potential damages it could bring such a level of anonymity. That’s due to the possibility of illegal activities becoming more accessible to the public.
Who Applies for These Regulations?
The draft indicates the regulations aim towards the use of DLT in order to either store or transmit value. While this can easily be inferred to mean cryptocurrencies and currencies in general, the document also establishes the meaning of “value” to include assets, holding, or any form of ownership. The regulations extend to any company that uses blockchain to keep records on the transmissions of value, which includes payments and settlements.
What Does The Draft Say About the Regulations?
While this brings new controls to blockchain-using firms, it also states that DLT service providers won’t fall under the oversight set by the Advertisements, Accounting and Financial, Conduct of Business, and Unsolicited Calls Regulations established by the Financial Services Commission in 1991.
The draft sets the regulations and a set of principles which mainly focus on honesty and integrity when conducting business. Also included in the document are the new legal requirements that have to be included in the Licenses, Penalty Fees, and Commission Fees Regulations. These new additions include:
- The type of business, class, and description needed for the license itself.
- The criteria for penalisation.
- The base fees (£10,000) and how to calculate annual fees.
What Does the Government Say About These Regulations?
Albert Isola, the Minister of Commerce, has expressed that the regulations “will provide strong long-term economic opportunity across many key areas of our economy.” Isole also explained that the “International reaction to our initiative has been overwhelmingly positive and reaffirmed our ability to embrace change in a safe and regulated environment.”
Samantha Barrass, chief executive of the of the Financial Services Commission, stated she believes this proves that “regulators can keep up to date with technology without stifling innovation, protect consumers and create a well-regulated safe environment in which financial technology can flourish.”
The regulations will come into play in January 2018. Although, this advancement did not happen overnight. The new rules were studied by the Cryptocurrency Working Group, a private initiative born in 2014, for over a year. And, if everything is approved, Gibraltar will become the first country to provide a regulatory framework for blockchain-based start-ups. Those are fantastic news for the future of the blockchain.