Imitation is the highest form of flattery

Protecting the Jurisdiction, Customers and Regulated Firms from "Imitators".

In June 2020, the Gibraltar Financial Services Commission (GFSC) issued six warnings in respect of cryptocurrency websites that claimed to be based in Gibraltar and authorised by the GFSC to operate as a regulated distributed ledger technology provider (DLT Provider). Some of these websites not only featured the GFSC's logo but also cloned websites belonging to authorised DLT Providers in an attempt to deceive consumers. 

This type of imitators have a negative impact on an industry, especially the emerging blockchain industry where stakeholders are actively trying to demonstrate the many use cases for this technology and the associated benefits of speed, efficiency and immutability. Imitators undermine the efforts of those trying to develop this technology and bring the benefits to a wider audience through blockchain-based applications.

While imitators may deter people from exploring the benefits of distributed ledger technology, their emergence and existence can also lead to positive outcomes for all connected to the industry. Imitators provide regulators with opportunities to showcase their ability to supervise their jurisdiction and identify those persons that attempt to mislead consumers by claiming that they are established in a specific jurisdiction or authorised to provide services. Regulatory warnings and bad publicity relating to imitators causes consumers to research and scrutinise service providers in more detail before using their services and consequently, consumers are attracted to service providers that are well-known and trusted. 

The GFSC's supervisory role is therefore vital to protect the reputation of Gibraltar, maintain the goodwill it has developed in the largely unregulated DLT industry and further its vision of ensuring that Gibraltar attracts quality businesses. Consumers engaging and transacting with a Gibraltar authorised DLT Provider can take comfort knowing that they are dealing with a regulated firm and DLT Providers can be reassured that the GFSC is keen to protect their investment, both in terms of time and money, that they have committed in setting up their Gibraltar operations. 

It is flattering for the jurisdiction and DLT Providers that these imitators see Gibraltar and Gibraltar authorised entities as businesses that carry a degree of integrity and trustworthiness. It clearly demonstrates the value of Gibraltar's bespoke DLT regulatory framework.