DLT Regulation in Gibraltar – The Nine Principals

DLT Regulation Gibraltar

As of January 1st 2018, Gibraltar’s widely-publicised regulations on Distributed Ledger Technology came into effect, bringing some much-welcomed regulatory oversight to the DLT and crypto sphere.

This ground-breaking piece of legislation is a milestone for the crypto industry and has already started attracting interest from both investors and DLT operators throughout the world.

While drafting the legislation the regulators decided to opt for a “light touch” approach; providing solid regulatory oversight while, at the same time, being ever-mindful of the need for continued innovation in the fast-moving crypto space. Underpinning this regulatory approach are the Nine Core Principals of Gibraltar’s DLT regulation:

Principal One: Honesty and Integrity

DLT providers must act with “honesty, integrity and professionalism”; they must always conduct their operations and communications in an honourable and forthright fashion and never “pose a risk to the public or to the reputation of Gibraltar”.

Principal Two: Customer Care

DLT providers must offer the utmost standards of customer care; they must always ensure all communications are clear-cut and transparent, with full disclosure of any conflicts of interest, and that all customer complaints or issues are dealt with swiftly.

Principal Three: Resources

DLT providers must ensure adequate resources are provided; they must ensure both financial and non-financial resources are available, including adequate insurance and capital.

Principal Four: Risk Management

DLT providers must take a common-sense approach to risk management; they must employ “forward-looking risk management practices” and always consider “risks to its customers and the reputation of Gibraltar in addition to risks to its own business.”

Principal Five: Protection of Client Assets

DLT providers must take significant steps to protect client assets; they must ensure adequate storage, data protection, proper record keeping and other appropriate measures to ensure the maximum wellbeing of all client assets.

Principal Six: Corporate Governance

DLT providers must “have effective corporate governance arrangements”; they must take careful consideration regarding structure, strategy, procedures and corporate culture.

Principal Seven: Cyber Security

DLT providers must demonstrate solid cyber security; they “must ensure that all systems and security access protocols are maintained to appropriate high standards” and all employees, including senior management and board members, must be fully aware of relevant cyber security threats.

Principal Eight: Financial Crime

DLT providers must take a proactive stance against financial crime; they must perform considerable due diligence and KYC vetting in full accordance with the Proceeds of Crime Act 2015 (POCA).

Principal Nine: Resilience

DLT providers must be resilient; they must be fully prepared for all possible contingencies to ensure minimal loss and disruption to clients, even in the event of the company winding down.

Hassans’ FinTech Team

The Hassans’ FinTech Team is able to provide expert legal and regulatory advice in the blockchain and crypto space and we remain poised to play our part in this globally transformative technology. Our team is comprised of practitioners with backgrounds in financial services, corporate and commercial law, tax and funds. We are therefore well positioned and suited to advise and guide crypto businesses through the regulatory hurdles in order to setup companies that will be licenced by a reputable regulator in a well-respected jurisdiction.

For further information see our brochure below, or simply right click here and click Save As to download.

DLT Regulatory Framework Brochure 2018