The Gibraltar Financial Services Commission (GFSC) bared plans to establish a new license for blockchain startups.
According to a report, the Gibraltar license would relate to firms transferring money or assets using blockchain or distributed ledger technology.
The move is the first of its kind and would essentially recognize the use of blockchain records as an accepted mechanism for transmitting payments.
This could pave the way for broader adoption of revolutionary technology which critics say is overhyped.
However, GFSC head of risk and innovation Nicky Gomez, said companies are looking to governments to regulate blockchain usage.
Gomez remarked:
“This is the first instance of a purpose-built legislative framework for businesses that use blockchain or distributed ledger technology.”
Blockchain first emerged as the architecture underpinning cryptocurrency bitcoin.
It is a shared electronic database that updates itself in real time and can process and settle transactions in minutes using cryptographic computer algorithms with no need for third-party verification.
Financial technology or fintech start-ups are using blockchain to offer services like payments and recording transactions.
This type of service potentially places them in competition with banks.
Gibraltar would push through by publishing its guidance on how to apply a new law passed last week.
The law amends its Financial Services (Investment and Fiduciary Services) Act to legally define how blockchains can be used for storing and transmitting data.
The next phase is to pass a bill aimed at DLT platforms, and another regulating initial coin offerings.
The Gibraltar government’s senior advisor on DLT, Sian Jones, said that the new regulations would allow businesses to easily gain bank accounts.
They would also be able to establish their legitimacy with potential customers.
Under the framework, startups will be mandated to hold some capital, though the precise amount is on a case-by-case basis.
They will also be asked to follow anti-money laundering and terrorist financing regulations.
“We have been talking with law firms and advisors helping companies to get established here,” Jones said.
