World’s First ICO Regulation to Be Introduced in Gibraltar
Developing draft law to take several weeks
Gibraltar, a British overseas territory, plans to introduce a legislation for initial coin offerings (ICOs), becoming the first jurisdiction in the world to regulate the booming market, where tech companies sell tokens to raise millions of dollars to develop their Blockchain-based projects.
The draft law is expected to be reviewed by Gibraltar’s lawmakers in the coming weeks, Reuters reported.
According to Sian Jones, a senior advisor with Gibraltar Financial Services Commission (GFSC), the main principle will be to regulate the “authorized sponsors”, who will be in charge of compliance with disclosure and financial crime rules.
ICO funding has literary exploded last year, accumulating USD 3.7 billion, compared to USD 100 million in 2016.
The huge difference raised a lot of questions, so the Gibraltarian regulators took action. Local authorities insist on warning investors about the highly risky and speculative nature of ICOs.
Another aspect of the bold move is that Gibraltar will leave the European Union alongside its parent nation – the UK. So, the local authorities are looking to expand the economy beyond the borders of casinos, poker and other type of gambling, which generate a significant part of the territory’s income. Last month, a license was issued to fintech firms with focus on leveraging the Blockchain.
Tokens are subject to the same investor protection rules as regular share offerings, Jay Clayton, head of the US Securities and Exchange Commission (SEC) insisted last week. Meanwhile, European prime ministers expressed opinion that without regulations, investors in the cryptomarket are potential targets of fraud.