Gibraltar continues to take the lead in initial coin offering (ICO) regulations in 2018, since becoming the one of the first jurisdiction to erect requirements earlier this year. The British overseas territory has continually tried to defuse concerns exercised by some of the world’s leading central bankers and investors.
Its latest efforts have resulted in more clarity surrounding token sales, at a time when many other jurisdictions have chosen more hard-lined approaches. Indeed, China and South Korea have opted to ban these practices altogether – for its part Gibraltar has decided to instead discuss a draft law in coming weeks to regulate the promotion, sale and distribution of tokens, per a Reuters report.
This is not to suggest ICOs in Gibraltar would come without conditions however, as previously outlined earlier this year. This includes abstaining from misleading advertisements, maintaining capital adequacy, proper risk management, adhering to requisite consumer protection protocols, as well as providing periodic disclosures to prevent money laundering.
Looking to 2018, the ICO market figures to build on a steadfast growth seen last year. This included a groundswell of token sales and funding which climbed to nearly $3.7 billion for the year, easily besting just $100.0 million in the year prior.
With ICOs poised to continue, Gibraltar’s government and Gibraltar Financial Services Commission (GFSC) are eying the official rollout of bespoke rules for tokens. “One of the key aspects of the token regulations is that we will be introducing the concept of regulating authorized sponsors who will be responsible for assuring compliance with disclosure and financial crime rules,” explained Sian Jones, a Senior Adviser to the GFSC.
The news is a welcome development for many countries and could serve as a paradigm for other jurisdictions moving forward. ICOs fell into a regulatory blind spot for much of 2017, with their rampant growth catching even the most optimistic analysts by surprise.
Proponents of ICOs should see the ongoing dialogue in Gibraltar as a positive step towards more long-term stability for token funding. These constructs have served to be quite polarizing in many locales and regions. On the opposite side of the fence, countries such as the US even started to design a rudimentary framework for token regulation.
This included a statement from the Head of the US’ Securities and Exchange Commission (SEC), who noted that tokens are securities and subject to the same investor protection rules as share offerings. As the discussion continues, it will be interesting to see if any other jurisdictions follow suit given the path currently being laid by Gibraltar.
It’s likely that in the coming months a fully cohesive set of laws will be on the books in Gibraltar. “We remain fully committed to ensuring that we protect consumers and the reputation of our jurisdiction,” reiterated Albert Isola, Gibraltar’s Commerce Minister.