Gibraltar Releases Blockchain Regulation Plans, Warns of ICO Risks

The Gibraltar Financial Services Commission, the financial regulator of the British overseas territory, has announced the implementation of new rules aimed at regulating the cryptocurrency trading sector.

In a statement released on September 22, the commission said that starting in January 2018, they will launch a new framework for regulating companies that use blockchain to "store or transfer other people's assets." In addition, the commission pointed out that ICOs (initial coin offerings) may also be regulated in the near future, and they are "considering a complementary regulatory framework for token sales, together with the distributed ledger (DLT) framework."

The regulator said that currently, ICO investment programs are unregulated, which means that investors cannot obtain any financial compensation or appeal opportunities.

The statement warned the public to be wary of the “highly speculative and high-risk” nature of token sales fundraising.

The statement reads:

ICOs are an unregulated way to raise funds for businesses and projects, usually at an early stage, before their products and services have been fully designed, built or tested, and before they have generated any operating revenue.

In the past month, regulators in many countries have issued similar statements about the risks of ICOs. For example, China issued a ban on ICOs earlier this month, and a large number of domestic cryptocurrency exchanges are about to shut down their services.

However, governments’ interest in DLT remains undiminished. In August, the Gibraltar Stock Exchange announced plans to become the first regulated exchange to deploy blockchain in its trading and settlement systems.