GIBRALTAR Law and Practice Contributed by: Aaron Payas, Jeremy Requena, Jerome Compson and Reece Atkinson, Hassans
• Market manipulation – this covers transactions/ orders giving false/misleading signals on supply/ demand/price, fictitious devices, profit-driven mis- leading dissemination, or benchmark manipulation. Traditional market abuse rules under the FSA apply to financial instruments. Most crypto-assets fall out- side of this definition, meaning that there is no direct equivalent to a full market abuse regime for crypto markets. However, the GFSC addresses similar risks through its ten DLT regulatory principles. Licensed firms must uphold market integrity, manage conflicts of interest, and prevent the misuse of information. This creates a conduct-based framework that indirectly targets behaviour akin to insider trading and manipulation. 2.6 Non-Compliance The GFSC has a comprehensive suite of enforcement tools under the FSA. Under Part 10, the GFSC has extensive information-gathering and investigatory powers, including the ability to require the production of documents, conduct on-site inspections, appoint skilled persons to prepare reports, and appoint inspectors to investigate the affairs of regulated firms. Under Part 11, the GFSC may impose administrative penalties, issue public statements, make cease and desist orders, temporarily suspend permissions, or issue prohibition orders against individuals. Additionally, the GFSC may apply to the Supreme Court under Part 13 of the FSA for injunctions restrain- ing contraventions or the disposal of assets, and for restitution orders. Failure to register as a relevant financial business or to comply with AML/CFT obligations under the RFB Regulations may result in enforcement action, includ- ing suspension or cancellation of registration. Carry- ing on DLT services without authorisation is a crimi- nal offence, punishable by imprisonment of up to two years and/or a fine. Enforcement Approach The GFSC’s enforcement approach has historically been supervisory and engagement-led rather than punitive, reflecting the collaborative regulatory culture
in Gibraltar. The GFSC has issued consumer alerts against unauthorised firms purporting to offer crypto- asset services from Gibraltar, and has taken steps to address firms operating without appropriate authori- sation or registration. As the market has matured, the GFSC has signalled a more rigorous approach to supervision, with increased scrutiny of governance, AML compliance, and client asset protection. Cross-Border Breaches Where firms operate on a cross-border basis with- out appropriate authorisation, the GFSC may deem the firm to be established in Gibraltar and subject to the FSA and DLT Regulations if there is a sufficient nexus to Gibraltar, such as actively marketing services to Gibraltar-resident individuals or institutions. The GFSC co-operates with international regulators and financial intelligence units to address cross-border compliance concerns. Regulatory Outlook The regulatory posture is not expected to change materially in the next 12 months, although the GFSC’s ongoing transition of VASP registrations into the DLT Framework may bring additional firms within the scope of its full supervisory and enforcement powers. 3. Licensing and Set-Up Requirements 3.1 Licensing Requirements Licensing Triggers The FSA prohibits any person from carrying on regu- lated activities as specified in Schedule 2 to the FSA by way of business in Gibraltar unless the person is either authorised or exempt. In this context, the trigger would be satisfying Part 16 of that Schedule, ie, the kind of activity carried on in relation to value belonging to another which is stored or transmitted by means of a database system or the provision of virtual asset arrangements. Territorial Scope If a person is neither authorised or exempt and wishes to carry out such regulated activity by way of business in Gibraltar, they will be required to obtain a licence
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