In this, our fourth In-Perspective interview, we speak to Anthony Provasoli, a Partner in Hassans’ Corporate & Commercial and Financial Services departments, a member of the firm’s sports law team and also the co-chair of the Hassans Fintech Team.
Anthony is ranked Tier 1 in Chambers and Partners Fintech and as a Legal 500 Leading Individual. He is widely recognised as being one of the key driving forces behind the development and growth of Gibraltar’s fintech industry and is regularly invited to speak at various high-profile Fintech events across the world including the World Blockchain Forum in London, the International Bar Association (Rome 2018, Seoul 2019) the v20 summit in Japan in 2019, which was an invite-only event.
In this interview, Anthony discusses his early days as a lawyer at Hassans, how he helped pioneer Gibraltar’s fintech industry and where he sees the industry, and Gibraltar, going in the future.
Your father is one of the original Partners in the firm going back to the early days – so becoming a lawyer, was this always something you felt you were going to do, or did that decision come later?
As I was growing up, I didn’t really understand what being a lawyer would entail, but I was always interested. In school we didn’t have any real career advice and so when the time came to decide what I wanted to study in University I didn’t have much guidance. My father always said that law was a good option because, even if I later decided that I did not want to practice law, a law degree would give me a good grounding and could open doors to other careers. It was not until I started practising law at Hassans in 2005 that I realised how much I actually enjoyed it and now I can say that I genuinely love what I do to the extent that I cannot see myself doing anything else.
Can you tell us about your early days at Hassans and the people you worked with as you developed within the firm?
In the early days I worked with my father (Tony Provasoli), Valerie Holiday and the Banking/Financial Services team. I worked mainly on property financing transactions but also did financial services regulatory work. As a young practitioner, I was obviously very eager to impress and so I always made myself available to assist on any matter regardless of the area of law.
After the financial crisis hit in 2008, there were fewer deals in property financing as credit institutions were looking to reduce their lending books and also there was less work in financial services generally, so I branched out and did some e-gaming and telecommunications regulatory work with Peter Montegriffo and Nyreen Llamas.
It must have been an interesting time to start with Hassans – so many changes within the firm, and for Gibraltar as a whole, with new industries developing and growing, new opportunities arriving.
Yes, when I joined Hassans in the summer of 2005, the firm was starting to grow in a major way which was exciting, with new areas such as e-gaming developing at a quick pace. Whilst we are always looking at ways in which we can grow as a firm, the growth rate these days is not as fast. But at Hassans we are always looking out for emerging industries and identifying how we can add value.
Now we are developing a training academy for our younger associates which I am very excited about and as part of that program we will have think tank sessions to explore new areas of interests. The idea is that associates will put forward proposals on how we can add value to new industries we may not have explored previously. Collectively, we can then help those associates develop new work streams.
One of the biggest developments in recent times has been how swiftly Gibraltar recognised fintech’s growth potential – something which you, yourself, were very much involved with in from the beginning. When did you first catch the “crypto bug”?
I first heard about Bitcoin around 6 years ago after a client had enquired about setting up a Bitcoin exchange in Gibraltar. I started reading as much material as I could find to try and gain a better understanding of the subject. I also started speaking about cryptocurrencies and blockchain technology to anybody who would listen, but not many had heard about it. Around that time, I attended a crypto summit in the Isle of Man which opened my eyes to the importance of regulation, so as soon as I returned I started lobbying the Minister and the regulator. Thankfully the Minister was very receptive as was the regulator …eventually.
I imagine getting people to understand concepts like cryptocurrencies and blockchain, which were brand new at the time and convincing them of the value – it would have taken some persistence at first?
The Government was very receptive and quickly put together a working group to start focusing on what our regulatory framework may look like. It took me a little longer to persuade the regulator that it was a good idea, but eventually, they realised that the Government was keen to regulate the industry and they saw that they were best placed to do so. At Hassans I was always supported by the partners.
The event with KPMG at the Sunborn back in 2014, which I understand this was the first of its kind on the Rock, featured Jon Matonis giving the keynote speech. Can you tell us a little about that?
Yes, it was the first crypto event that had been held in Gibraltar and I was asked to moderate a panel featuring Sian Jones, who eventually joined the Gibraltar Financial Services Commission, Tom Robinson of Ecliptic, Eric Benz of Changelly who was involved with GO Coin at the time, also gave a presentation as did Jon Matonis, who was the Chairman of the Bitcoin Foundation. These were all people I looked up to, so it was very exciting to be a part of that. Since then, obviously I have gone on to speak at many events but that was my first taste of it.
Tell me a little about how things developed from there, in terms of the genesis of Gibraltar’s own fintech industry, as well as the advent of Hassans own specialist fintech team, and the events which lead up to the DLT Regulations in 2018.
As soon as the Government announced that it was working on a regulatory framework for DLT businesses, in May 2017, we started getting a lot of enquiries. Essentially Gibraltar was going to be the first jurisdiction to have a regulatory framework specifically designed for DLT businesses that were using DLT to either store or transmit value belonging to others. Moreover, they were going to be regulated at the same standard as traditional financial services institutions, so obviously this announcement put Gibraltar on the map for cryptopreneurs. As a result of the demand I had to bring people in to help service the clients and that is when the Hassans FinTech team started to grow.
So, New Year’s Eve 2017, the new regulations come into force…. How long before the first applications came in?
The Government had announced a few months earlier that anybody who was already providing DLT services in or from Gibraltar prior to January 2018 would benefit from a grandfathering arrangement, which meant that they could continue to operate post January 2018 without a licence, provided that they submitted an application within 3 months. Obviously everybody wanted to set something up before the end of the year which meant that we didn’t have much of a Christmas break that year.
I understand there’s a strict vetting process for applications, can you tell us a little bit about that, how the application process works and the significance of the Regulations’ principle-based approach?
As I mentioned earlier, DLT firms in Gibraltar are regulated at the same standard as PSPs or EMIs and in my view this is the right approach. These firms are handling or acting as custodians of customers assets so why shouldn’t they be regulated at the same level as an e-money operator or a payments service provider?
Of course, many of the regulations that apply to EMIs or PSPs are not relevant in the crypto industry, which is why it was important to create bespoke regulations but the regulatory principles that you find in Gibraltar’s DLT Regulations are very similar to those you will find in the traditional financial services legislation.
Generally, I have found the application process to be a positive experience. There were some teething problems with the first batch of applications, which was expected, but the process is becoming more streamlined and the regulator commits to a turnaround time of 3 months from the date when a full application is submitted, which is not unreasonable.
Can you tell us about some of the companies and brands which you and the fintech team have helped establish a presence in Gibraltar?
eToro, CEX.io, First Digital Assets Group, Tap Global, Colu, SAGA and Modex Technologies are all brands that we have helped establish themselves in Gibraltar and we have also done some work for Gemini and Mastercard and worked on some well-known token sales, such as INX and Telegram to name a few.
It’s now been two years since the regulations have gone into force, how has the landscape changed, both locally here in Gibraltar, and in the fintech industry in general?
We are starting to see the ecosystem grow significantly. Most DLT and Fintech firms that we are working with are increasing their local presence and it is also very encouraging to see many of the founders wanting to move to Gibraltar to be closer to their business. Gibraltar has special tax schemes, of course, that help incentivise these individuals to relocate to Gibraltar and the lifestyle here I am sure also plays a big part.
In terms of how the industry has developed and how the landscape has changed, it must be said that the market is much more sophisticated. Investors are no longer throwing money at companies simply because they are issuing a token or because there is a blockchain element to the business.
Also, last year’s FATF recommendations have forced most jurisdictions to impose AML and KYC requirements on their virtual asset service providers. Gibraltar’s DLT Regulations are much more sophisticated than just AML and KYC, but other jurisdictions are now slowly starting to make moves towards some form of regulation. We have also been working on a number of tokenised securities and stablecoin projects which we are very excited about and I am very much looking forward to what 2020 may bring.
What are the trending topics in the fintech sphere right now, and what do you think will be the major development in 2020?
I think we will see more stable coin projects as well as projects focusing on the tokenisation of traditional assets. Other than that, I would like to see more decentralised finance or “Defi” projects. I am very interested to see how regulators will deal with this.
As we begin a new decade, what do you think the future has in store, both for Gibraltar as a jurisdiction and the fintech industry as a whole?
The future looks very positive for Gib as a Fintech and DLT hub. The Government of Gibraltar and the Regulator continue to be very supportive of the industry and that has played a big part in its success.
Fintech was just the latest in a long line of industries where Gibraltar has been quick off the mark in realising the potential – are there any other key sectors which you’re excited about?
CBD & medical cannabis is an area of interest where a lot of interesting things are happening behind the scenes. Another is e-sports and interactive entertainment.
Gibraltar is also growing its athletic profile and has also hosted some major sporting events such as the Island Games, can you talk about this and how it coincides with the launch of Hassans’ new Sports Law team?
We have been advising on matters of sports law for some time now. We have advised many of the local football clubs on structural matters, players contracts, partnerships and acquisitions.
We have also advised UEFA and the Gibraltar Football Association on certain matters over the years and we have also done work on image rights structuring for entertainers and sports personalities.
And, of course, this is not the only athletic-related team you’ve been involved with – you were also a member of the famous Hassans 4, participating in the Walk For Life last October, can you tell us a little bit about that?
I cannot say I enjoyed doing that and I certainly underestimated how tough it would be but it was for a very good cause and we raised a lot of money for the charity, so it was very rewarding for that reason.
Anthony Provasoli will be speaking at FinTech Tel Aviv on Sunday 9th of February.