GIBRALTAR Law and Practice Contributed by: Aaron Payas, Jeremy Requena, Jerome Compson and Reece Atkinson, Hassans
Alignment With International Approaches Gibraltar has implemented a virtual asset service pro- vider regime consistent with FATF recommendations, including registration requirements for the purpose of AML/CFT compliance supervision, and the imple- mentation of the travel rule for crypto-asset transfers. Legislative updates and regulatory guidance have been introduced to ensure ongoing compliance with evolving FATF standards, reflecting Gibraltar’s prior- ity to maintain international AML and CFT standards. In relation to the Bank for International Settlements (BIS) and the International Organization of Securities Commissions (IOSCO), Gibraltar has not issued spe- cific guidance or regulatory measures directly imple- menting their crypto-asset standards. However, the GFSC monitors international developments and has conducted reviews to ensure that the DLT Framework maintains regulatory standards consistent with evolving global expectations. Where crypto-assets fall within the definition of financial instruments under the FSA, exist- ing securities regulation, which has historically been aligned with EU law transposed into Gibraltar, provides a framework broadly consistent with IOSCO principles. 2.2 Crypto-Asset Regulatory Frameworks Classification of Crypto-Assets Gibraltar does not take a prescriptive approach when defining crypto-assets in the way that other juris- dictions do; instead, it takes a broader approach. It deliberately applies a wider definitional framework by not distinguishing between different types of crypto-assets and instead using the broad term Vir- tual Assets. Under this framework, Virtual Assets are defined as digital representations of value that can be digitally traded or transferred and can be used for payment or investment purposes but do not include digital representations of fiat currencies. Existing Regulatory Frameworks In relation to existing regulatory frameworks that apply to Virtual Assets in Gibraltar, the two prominent pieces of legislation are the FSA and the RFB Regulations. The FSA explains that an activity is regulated when it falls within the types listed in Schedule 2, is carried out as part of a business, and relates to any of the matters set out in Section 5 (2). One of these matters covers value belonging to another that is stored or transmit-
directions or applying to the Supreme Court for injunc- tions or restitution orders, where a regulated firm faces financial difficulty. The treatment of crypto-assets held on behalf of clients in an insolvency will depend on the specific custodial and contractual arrangements in place, with the general common law position being that assets held on trust for clients should not form part of the insolvent estate. 1.2.6 Industry and Trade Bodies As noted at 1.1.5 Industry and Trade Bodies , the Gibraltar Association for New Technologies (GANT) represents both the blockchain and crypto-asset industries in Gibraltar, providing a platform for industry dialogue and engagement with government. 2. Regulation 2.1 Regulators and International Alignment Gibraltar Regulatory Bodies The most relevant regulatory bodies in Gibraltar to businesses or individuals using blockchain and cryp- to-assets are the GFSC and the Gibraltar Financial Intelligence Unit (GFIU). The GFSC is the dominant regulator for blockchain and crypto-asset businesses in Gibraltar; it regulates DLT Providers. The GFSC regulates any business engaged in a Regulated Activity, which encompasses any business using DLT for storing or transmitting value belonging to others, in or from Gibraltar. In comparison to other jurisdictions, Gibraltar applies a principle-based regulatory approach governed by ten mandatory principles, ranging from Honesty and Integrity to Customer Care. Moreover, the GFSC fol- lows a risk-based supervision model where the inten- sity and occurrence of supervision is dependent upon the associated scale and risk of the relevant operation. In relation to AML/CFT supervision, the GFSC also enforces compliance with the Proceeds of Crime Act 2015 (POCA). Furthermore, the GFIU is also relevant: it is respon- sible for facilitating the receipt and analysis of suspi- cious transaction reports filed by relevant entities.
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