HM Government of Gibraltar has published new regulations aiming to set a standard for market integrity in the digital asset sector. The goal is to the prevention of market manipulation and insider trading as well as additional disclosure and outlined trading standards.
According to a statement issued by Gibraltar Finance, amendments to existing regulations add a 10th Regulatory Principle to Gibraltar’s Financial Services (Distributed Ledger Technology Providers – aka blockchain) Regulations. These amendments require all DLT Providers operating in Gibraltar to conduct themselves in a way that “maintains or enhances the integrity of the markets in which they participate.”
The Gibraltar Financial Services Commission (GFSC) has published a Guidance Note (embedded below) which provides additional information.
Gibraltar has sought to establish itself as a jurisdiction of preference for digital asset issuers and innovators. Gibraltar was the first jurisdiction globally to introduce legislation around DLT.
The regulations were drafted by the GFSC with the assistance of a Market Integrity Working Group that included government representatives and leaders in the blockchain and digital asset space.
Members of the Market Integrity working group include: Emma Channing, General Counsel, Satis Group LLC; Joshua Ashley Klayman, Senior Counsel, Linklaters LLP; Roman Beck, Head of European Blockchain Center (University of Copenhagen); Jannah Patchay, Regulatory and Market Structure Advisor, Markets Evolution; Joey Garcia, ISOLAS LLP, Xapo, IOV Labs, Gibraltar; Tongtong Gong, co-founder of Amberdata; Barbara Halasek, Coinfirm; Nicholas Philpott, Banking Market Structure expert.
Minister for Digital and Financial Services, the Hon Albert Isola MP, commented on the new rules:
“Gibraltar continues to lead the way in defining standards in the virtual asset sector. As is the case with traditional markets, I have long believed that defining standards of market integrity would be required for the continued development and adoption of this industry. Like any other market, the virtual asset market must operate in a manner that is fair, orderly and efficient, whilst enhancing the levels of trust that firms in the regulated sector currently enjoy. We must ensure that we provide operators with a framework that enables them to maintain the same high standards as operators do in traditional industries. I am most grateful to our panel of experts who have played such an integral role in shaping this new legislation working together with the GFSC and to sector representatives for their invaluable contribution to the industry consultation process.”
Lee A Schneider, General Counsel at Ava Labs and member of Gibraltar’s Market Integrity working group stated:
“Market integrity is the next frontier for digital assets regulation, so we naturally see the authorities in Gibraltar taking a leading role in defining the core concepts in a practical fashion that furthers its existing regulatory regime.”
Kerry Blight, CEO of the Gibraltar Financial Services Commission explained that since the introduction of the DLT regulatory framework in 2018, they have collaborated with policymakers, advisors and industry insiders to refine guidance and ensure it is suited to this rapidly developing sector.
“The Market Integrity Principle and Guidance Note further strengthen the framework. They introduce a number of key responsibilities, designed to enable firms to root out insider trading and other forms of market abuse, improve standards around disclosure and transparency, and ultimately safeguard the rights and interests of consumers.”
Garcia, who co-led the working group, said it is great to see Gibraltar setting standards for regulating the VASP space, especially in light of the FATF guidance and the need for market integrity.
Gibraltar Guidance Note 10 - Market Integrity GFSC April 2022