Albert Isola, the Minister of the Digital and Financial Services of Gibraltar, has announced upcoming regulations to decrease market manipulation among blockchain firms.
On April 10, it has been reported in an interview with The Banker that Isola also discussed his government’s decision to abandon its development of a legislative apparatus for token sales amid the bursting of the initial coin offering, or ICO, bubble.
However, Isola states that Gibraltar’s government will introduce regulations to mitigate market manipulations in the blockchain sector “in the next few months.”
Isola describes manipulation as an “increasing risk” among distributed ledger technology (DLT) companies, emphasizing that a tenth “core” regulatory principle will address the issue.
It has been analyzed that Gibraltar claims to have been the first jurisdiction to regulate and license DLT firms when the Gibraltar Financial Services Commission (GFSC) introduced a modified fintech license for blockchain companies on January 1, 2018.
The regulations spanned nine core principles, including directives addressing risk management, cybersecurity, and financial crime.
Likewise, Isola states that the government is currently developing a technology solution to address recommendations by the Financial Action Task Force, or FATF, in its 2019 review of the territory’s financial regulations.
It has also been analyzed that the technology stack will primarily seek to address the FATF’s travel rule and will be designed to automatically collect information as Gibraltar-based firms make financial transfers.
Also, Isola states that 15 blockchain firms are currently regulated in Gibraltar by adding that “they are subject to the same supervisory regimes as banks or financial services firms.”
ICO Regulation Amid The Dramatic Decline
Isola emphasizes the importance of regulators keeping pace with global development within the DLT sector in order “to remain fit for purpose.”
He notes his government’s decision to abandon its development of ICO regulation amid the dramatic decline in the number of initial coin offerings since 2017.
“[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.”
Thus, Isola states that while Gibraltar considered regulating crypto assets broadly, the government “concluded that it was too challenging to do it safely.”