Gibraltar ready to tackle market manipulation in DLT space

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As is the case with virtually every aspect of the blockchain industry, regulations for how distributed technology ledger (DLT) companies can operate continue to be introduced. The measures are a way to ensure the blockchain space can mature at an acceptable pace, while, at the same time, offering better protection to consumers. Gibraltar has now stepped up its efforts regarding DLTs, introducing new regulations designed to help cut out market manipulation on the part of blockchain companies operating in the segment.

Financial news outlet The Banker conducted an interview with Gibraltar’s minister for digital and financial services, Albert Isola, last week. He pointed out that, within the next couple of months, Gibraltar’s government will have finalized the new anti-manipulation regulations, which means the number of companies operating out of the region is about to get smaller. Isola added that there is an “increasing risk” among DLT companies, and that the new regulatory principle will help mitigate that risk.

Gibraltar took the lead on DLTs at the beginning of 2018 when it began to regulate and license companies wishing to operate in the sector. The Gibraltar Financial Services Commission (GFSC) stepped up to provide guidance through a modified FinTech licensing approval system, and nine “core” regulations were implemented at the time. The new regulations will become the tenth of those core guidelines. 

The local government is also ready to join those countries that have already agreed to adopt the digital asset policies laid out by the Financial Action Task Force (FATF). Isola added that plans are in place to introduce a technology solution that will help with the implementation of the suggestions made by the FATF, and will include, among others, the same information-gathering requirements for transactions that all G20 countries have agreed to adopt. 

DLT real-world applications are on the rise, and Gibraltar’s government is making sure it can keep up with the changes. It has stepped back from offering more regulations for initial coin offerings (ICO) since these are no longer as popular as they were a couple of years ago. Isola asserts, “[W]e looked at developing a token regime two years ago, because we were concerned about the boom in token sales. But by the time we came to launching the regime in 2019, it was close to the publication of the Financial Action Task Force recommendations, so we decided to wait. Also, the market seemed to be quietening down, so the risk tapered.”

However, this doesn’t mean that the government is going to be lax on monitoring the offerings, or any other aspect of the digital currency space. Gibraltar continues to adapt to the changes as it deems necessary and is content with creating a fluid system of control that will allow for innovation while protecting consumers at the same time.