In the coming few weeks, the Gibraltarian government together with Gibraltar Financial Services Commission (GFSC) –the territory financial watchdog will present a draft law that will regulate ICOs in the British overseas territory. The regulations come as the ICO market is growing rapidly and like other countries that are open to Blockchain, the government has termed the regulations a move to protect Investors and consumer.
Gibraltar’s lawmakers claim the regulations will be broad and the first involving ICOS. The main components of the draft law include regulations on promotion, sale, and distribution of virtual tokens in Gibraltar. According to a Reuters report, the law will also introduce a concept “authorized sponsors,” who will be mandated with assuring compliance with relevant financial regulations. The Government and the GFSC stated that the new law will require ICOs provide investors with detailed and audited information to avoid cases of fraud and misleading
This comes as central Banks and regulators have been calling for regulations around cryptocurrencies and ICOs to protect consumers. However, most regulators are cautious about the impact of regulations on innovations in the finance sector.
Gibraltar’s decision is being monitored closely by global regulators on its level of success during implementation. On Tuesday, Jay Clayton the head of U.S. Securities and Exchange Commission SEC stated that ICOs and share offerings should be subjected to the same investor protection rules. Other Global regulators are expected to publish their rules on ICOs with Britain and Singapore following closely the Gibraltar’s move, while the French markets watchdog AMF already published a discussion paper on ICOs last year.
The new regulations were planned to come into effect in as on January 2018. The expectation was that the regulations will affect commercial use of distributed ledger technology (DLT) as a financial instrument.
This comes as the crypto world is facing much criticism and introduction of choking rules and regulations. China recently introduced a ban on all ICO token sales in the country and moving towards a total ban of cryptocurrencies. The country’s central bank recently issued a statement on restricting access to foreign crypto exchanges. The exchanges will be restricted through firewall setting and a crypto and ICO ad ban is in place.
The territory is looking for means to expand its financial sector currently dominated by gaming as it will exit from the European Union in 2019 along with the United Kingdom. It already gained world attention after issuing first customized license using the blockchain distributed ledger technology that supports Initial Coin Offerings. The commerce minister stated that they intend to protect consumers and maintain their financial reputation in the years to come.