Token Sales And Regulations In Gibraltar

Gibraltar's stature as a leading global FinTech jurisdiction has taken another huge step forward this month with the publication of the official Gibraltar Finance Token Regulation Policy Document.

While the January 2018 DLT regulations provided a strong regulatory framework for distributed ledger technology-based businesses, these new token sale regulations will be specifically aimed at businesses looking to raise capital through token sales.

Gibraltar's Token Regulations are scheduled to come into effect in the second quarter of this year, thus creating a fully-regulated market for token sales, ICOs and other crypto and blockchain-based operators looking to raise capital.

This landmark piece of legislation will strike the perfect balance between regulation and innovation, with robust consumer and investor protection on the one side, flexibility and ingenuity on the other.

How Gibraltar's Token Regulations will work

The British territory of Gibraltar was among one of the first jurisdictions to recognise the massive potential of crypto asset classes such as tokens, while also anticipating the markets' need and desire for careful, yet flexible, regulation.

The proposed regulations build upon Gibraltar's solid reputation as a trusted financial market, advocating smart ideas, solid financials, tough security and the utmost integrity, while also providing ample space for the next wave of crypto pioneers to evolve and thrive.

Token Regulation focus

The primary focus of these new Token Regulations are as follows:

the promotion, sale and distribution of tokens; the operation of secondary market platforms trading in tokens; and the provision of investment and ancillary services relating to tokens [Source: http://gibraltarfinance.gi/20180309-token-regulation—policy-document-v2.1-final.pdf]

Taking each in turn:

The promotion sale and distribution of tokens: Here the regulations are concerned with the adequate disclosure of information, compliance with Gibraltar's Proceeds of Crime Act and the operation's specific connection to Gibraltar.

Applicants will require specially-appointed "Authorised Sponsors", experienced professionals who will guide applicants throughout the various stages of their token sale process.

Authorised Sponsors will need to set out their own unique Codes of Practice for each applicant, based on a specific set of principals outlined in the regulations.

The Gibraltar Financial Services Commission (GFSC) will maintain a public...