Gibraltar Opens the Door to Tokenised Fund Shares: What It Means and Who Can Use It

DLT now sits inside Gibraltar's statutory framework for investment funds, a step most jurisdictions have discussed without legislating for it.

The Protected Cell Companies (Amendment) Act 2026, in force from 30 July 2026, gives fund managers the legal tools to issue, register and transfer fund shares on a distributed ledger. It is primary legislation, passed through Gibraltar's Parliament, carrying full legal recognition alongside the existing Companies Act 2014, as opposed to a sandbox experiment or a pilot programme.

Fund managers, investors and service providers who have been waiting for a regulated jurisdiction to legislate on tokenised fund shares now have one.

What the Law Actually Does

The Act amends Gibraltar's Protected Cell Companies Act 2001, extending it so that protected cell companies (PCCs) authorised as Experienced Investor Funds (EIFs) may issue shares in tokenised form.

A share token is a digital token recorded on a distributed ledger which carries the same legal rights and investor protections as a traditional share certificate, and the Act makes the position explicit: share tokens are legally equivalent to paper certificates under Gibraltar law.

Three changes carry the most weight:

1. Tokenised share issuance. A Gibraltar EIF structured as a PCC may issue its shares as tokens on a blockchain or other distributed ledger, subject to prior approval from the Gibraltar Financial Services Commission (GFSC).

2. DLT-based share registers. A fund may record and maintain its ownership records on a distributed ledger in place of a paper or centralised electronic register of shareholders, which is the backbone of tokenised fund administration.

3. Smart contracts with full legal effect. The transfer of shares by smart contract, including the use of cryptographic signatures, is legally recognised under Gibraltar law, so that a transfer executed on-chain is a valid transfer.

The legislation builds on Gibraltar's DLT Provider framework, in place since 2018, which already regulates businesses using distributed ledger technology for commercial purposes. The 2026 Act extends that regulatory infrastructure into the fund sector.

Who Can Use This Structure

The tokenised share framework is available to PCCs authorised as Experienced Investor Funds. EIFs in Gibraltar are funds for sophisticated investors, typically those investing a minimum of €100,000 or who otherwise qualify as experienced, and they are regulated by the GFSC across a range of fund types.

The PCC structure sits at the centre of the legislation's flexibility. A PCC may create multiple sub-funds, or cells, each legally ring-fenced from the others, so that a single legal entity can run several sub-funds, with each cell operating its own investment strategy and holding its own assets independently. Under the 2026 Act, individual cells within an EIF PCC may each issue tokenised shares.

The GFSC must approve tokenised share issuance, and funds must meet requirements covering investor eligibility, cybersecurity, custody arrangements and risk disclosure. The regime is a regulated one, with blockchain mechanics layered into established fund supervision.

Practical Use Cases

1. Private Equity and Venture Capital Funds

Illiquidity remains one of the persistent frustrations in private markets, where investors commonly commit capital for seven to ten years with limited ability to exit early. Tokenised fund shares create the infrastructure through which that constraint can be addressed, without resolving it automatically.

Where shares are recorded on a ledger and transfers are executed by smart contract, secondary transactions become significantly more straightforward operationally. A tokenised private equity fund can facilitate peer-to-peer transfers between eligible investors, or connect to a secondary marketplace that verifies eligibility on-chain before executing a trade, with the legal recognition of smart contract transfers closing the gap between on-chain execution and the legal record.

The PCC structure suits this well. A multi-vintage private equity manager could use a separate cell for each fund vintage, with each cell issuing its own tokenised shares and maintaining its own DLT register.

2. Real Asset Funds: Property and Infrastructure

Real estate and infrastructure funds have long attracted interest from a broader pool of investors than they typically reach, largely because minimum investment sizes have been prohibitive. Tokenisation enables fractionalisation.

A Gibraltar EIF PCC investing in a portfolio of commercial properties could issue tokenised shares representing fractional interests in that portfolio, allowing eligible investors who fall short of the threshold for a traditional institutional fund to participate at lower denominations, with distributions such as rental income or refinancing proceeds automated by smart contract.

The ring-fencing of PCC cells carries value here as well, since separate cells could hold different property types, geographies or risk profiles, each with its own tokenised share class.

3. Digital Asset and Crypto Funds

For funds investing in digital assets, the fit is intuitive. A Gibraltar EIF holding a portfolio of cryptocurrencies, digital tokens or blockchain-based instruments may now issue its own shares in the same technological environment as its underlying assets, with subscriptions, redemptions and NAV calculations integrated into a single on-chain workflow.

This also addresses a structural tension in the crypto fund space, where on-chain assets have sat alongside off-chain fund administration. A tokenised EIF bridges that gap within a regulated framework, giving institutional investors the legal certainty they require.

4. Multi-Strategy Funds with Segregated Cells

The combination of the PCC structure and tokenised shares is particularly powerful for managers running multiple strategies, since each cell of a PCC can have its own investor base, its own investment mandate and now its own tokenised share class with its own DLT register.

A manager could run a fixed income cell, an equity cell and a digital asset cell within a single PCC. Investors in each cell hold tokenised shares in that cell alone, with the ring-fencing provisions of the PCC Act ensuring that assets in one cell are not exposed to the liabilities of another, while the use of DLT registers and smart contracts across cells can reduce administrative overhead substantially.

5. Impact and ESG Funds

Transparency remains a persistent challenge in ESG investing, where investors want assurance that capital is being deployed as promised and managers increasingly need to demonstrate it. A DLT-based register creates an immutable, auditable record of ownership and transactions, which can be complemented by on-chain reporting of impact metrics.

A Gibraltar EIF investing in renewable energy projects, social enterprises or sustainability-linked assets could use smart contracts to automate the distribution of proceeds tied to verified impact outcomes, with the transparency of the ledger supporting reporting obligations and investor confidence while holding administrative burden steady.

6. Fund of Funds Structures

A PCC EIF investing into other funds could use tokenised shares to manage its own investor base, and in principle to hold tokenised interests in underlying funds that have themselves adopted the structure. As tokenised fund shares become more prevalent, the ability to hold and transfer them within a regulated wrapper becomes increasingly valuable.

Why Gibraltar?

Gibraltar has consistently moved faster than larger jurisdictions on digital asset regulation. Its DLT Provider framework, introduced in 2018, was the first of its kind, and the 2026 Act continues that approach by creating a clear, workable legal basis for tokenised funds in advance of any pan-jurisdictional consensus.

The regulatory environment is proportionate. The GFSC is accessible, the approval process for EIFs is well understood, and the legal framework is built on established company law, so that Gibraltar extends a framework that already works.

International fund managers examining tokenisation have consistently asked where it can be done in a way that is legally certain and regulatorily defensible. Gibraltar now offers a clear answer.

What to Consider Before Structuring

The legislation is in force, and implementation will involve careful planning. Key considerations include:

• GFSC approval: Tokenised share issuance requires prior GFSC approval, and applications will need to address specific requirements, including cybersecurity protocols and custody arrangements for the tokenised shares.
• Investor eligibility: The EIF regime limits participation to experienced investors, so any technology used for subscription or transfer must include appropriate eligibility verification.
• Custody: The Act imposes requirements around custody of share tokens. The market for regulated digital asset custodians is maturing rapidly, and the choice of custodian will be a key structural decision.
• Smart contract design: Legal recognition of smart contracts is established, and the programming of those contracts should be approached with the rigour applied to any legal document.
• Tax: Gibraltar has a territorial tax system with no capital gains tax, making it an efficient location for fund structuring, while individual investor tax positions will depend on their home jurisdiction.

Conclusion

The Protected Cell Companies (Amendment) Act 2026 is enacted law, giving fund managers, investors and service providers a concrete, regulated framework for building tokenised fund structures in Gibraltar today.

The use cases run from private equity to real assets to digital asset funds, and the inherent flexibility of the PCC structure places Gibraltar well to serve managers running multiple strategies within a single, efficient legal vehicle.

Managers who have watched the tokenised fund space without committing to it now have a framework worth examining closely.

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