GIBRALTAR Law and Practice Contributed by: Aaron Payas, Jeremy Requena, Jerome Compson and Reece Atkinson, Hassans
1.1.3 Regulation of Blockchain Technology Regulatory Attitude in Gibraltar The government of Gibraltar and the GFSC have consistently adopted a pro-innovation but risk-aware approach to blockchain. Since launching the DLT Framework, Gibraltar has sought to attract reputable firms while maintaining strong regulatory credibility. The Framework is principles-based, focusing on out- comes such as consumer protection, market integ- rity, and financial crime prevention rather than rigid, prescriptive rules. This has fostered a collaborative environment in which firms can engage with the GFSC during both the licensing process and ongo- ing supervision. The relevant Guidance Notes on the DLT Framework continue to be updated periodically to reflect market developments and regulatory expe- rience, and there are indications of a gradual move towards more prescriptive regulation over time. Gibraltar remains supportive of blockchain, but with a clear expectation that businesses meet high regula- tory standards. Regulation of Blockchain Technology In Gibraltar, regulation is activity-based rather than technology-based. This means that blockchain tech- nology itself is not regulated simply because it is used. Instead, regulation applies where the activity involves storing or transmitting value belonging to others or otherwise falls within traditional financial services defi- nitions under the FSA. Where blockchain is used without crypto-assets or without handling client value, it will generally fall out- side of the DLT Framework. In such cases, businesses may still be subject to general legal frameworks such as financial services-related activities and data pro- tection. This approach allows blockchain-based enterprises which do not fall within the DLT Framework, or other regulatory regimes, to develop without unnecessary regulatory burden. Privacy and Blockchain Gibraltar’s data protection regime is set out in the Gibraltar GDPR, which mirrors the EU framework in a
manner similar to the UK GDPR. These requirements apply to all blockchain activities involving personal data. When personal data is collected, firms must design solutions carefully, for example by storing personal data off-chain or using encryption and hashing tech- niques. The Gibraltar Regulatory Authority (GRA) is the super- visory authority for data protection in Gibraltar, oper- ating independently of the GFSC. While the GFSC regulates blockchain firms from a financial services perspective, the GRA oversees compliance with data protection obligations, including the processing of personal data by DLT Providers on-chain and off- chain. Firms must therefore engage with both regula- tors where their activities involve both financial ser- vices and the processing of personal data. 1.1.4 Smart Contracts Whilst Gibraltar is yet to issue guidance on the enforce- ability of smart contracts in the jurisdiction, the laws of England and Wales provide persuasive guidance. In England and Wales, the UK Jurisdiction Task Force (UKJT) provided a legal statement on crypto-assets and smart contracts in 2019. Here, it concluded that smart contracts are capable of being legally enforce- able in a court of law, so long as the traditional require- ments for a valid contract exist, such as: offer, accept- ance, consideration, intention to create legal relations, authority and capacity, and certainty. Although no Gibraltar court has specifically ruled on the enforceability of smart contracts, Gibraltar applies English common law principles, and the UKJT’s con- clusions would be highly persuasive. In practice, the GFSC and market participants treat smart contracts as capable of giving rise to enforceable legal obliga- tions, provided the traditional requirements for con- tract formation are met. Gibraltar’s principles-based DLT Framework does not distinguish between agree- ments executed through smart contracts and those executed through traditional means, reinforcing the view that the enforceability analysis turns on sub- stance rather than the medium of execution.
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