Government of Gibraltar Publishes Outline of Forthcoming Token Regulatory Framework03/14/2018On March 14, 2018, the Government of Gibraltar published a white paper outlining forthcoming proposals to regulate token sales, secondary token market platforms and token investment services. Broadly, the proposed regulations would establish a regime that would require organizers of each token sale to designate an “authorized sponsor” to oversee and implement best practices relating to the sale. These “codes of practice,” which the white paper says will be specified in the regulations, must be incorporated into the authorized sponsor’s agreement with each of their sponsorship clients. The regulations will also set out requirements for secondary token market platforms regarding trading supervision and data disclosure, and cover investment services and advice for tokens, virtual currencies and central bank-issued digital currencies. The Government of Gibraltar intends to phase in these regulations in three parts, the last of which is expected to be completed by the end of October 2018.
The white paper also distinguishes most tokens from securities and makes clear that Gibraltar sees token sales, when conducted properly, as an effective means of crowd funding. This further establishes Gibraltar as one of the most token-friendly jurisdictions in the world, as Gibraltar also implemented a DLT regulatory framework in January 2018. It remains to be seen what effect these regulations will have going forward and whether other jurisdictions will follow suit.