A Gibraltar Crypto License enables users to establish a variety of crypto businesses, such as a crypto exchange where fiat to cryptocurrency and cryptocurrency to fiat exchange are integrated.
Under Gibraltar’s legislation, any company that is professionally performing – in, out, or from Gibraltar – DLT (Distributed Ledger Technology) services for storing or transmitting value belonging to other people needs to get authorization from the Gibraltar Financial Services Commission (GFSC).
Requirements for Getting a Crypto License in Gibraltar
The DLT structure applies to activities not subject to regulation under any other regulatory framework that utilizes DLT to transmit or store value belonging to others. Therefore, the license can be used for a variety of activities within the crypto industry, including exchanges and wallets.
The regulatory requirements are referred to as a set of principles rather than firm rules. Any crypto license applicant has to meet the following nine criteria, as per the official paper:
- Honesty and integrity;
- Maintaining adequate financial and non-financial resources;
- Paying due regard to the interests and requirements of its customers;
- Maintaining High-Security Access Protocols;
- Forward-looking Risk Management practices;
- Being flexible and having contingency plans in place for the orderly and solvent dissolution of its business;
- Effective Corporate Governance;
- Having adequate arrangements in place for the protection of applicant’s assets and money, including segregation of assets;
- Detecting and disclosing Financial Crime Risks.
The Process, Fees, and Costs
The crypto license application process starts with a pre-application engagement, where the client’s application project is reviewed, along with the client’s business model and the type of activity or service they want to provide.
The next process comprises the initial application assessment when the GFSC carries out an initial analysis of the native risks and complexity of the client’s proposed activity and business model. The point is to gain an initial understanding of the business model and to make an analysis of the complexity of the application – this part of the process usually takes around two weeks.
The following process is the full application and presentation part. When entering this stage, all the documentation needed has to be sent over to the GFSC, and the applicant is invited to hold a presentation before the GFSC committee. The presentation is deemed a complete part of the authorization process because the applicant must demonstrate how they and their activity will meet the requirements created in the guidelines.
The amount of the GFSC application fee relies on the complexity of the proposed activity – however, fees are never lower than $13,500 (£10,000), and the more complex cases may be taxed as high as $40,700 (£30,000). Usually, exchanges enter this latter category.
There is no exact timeframe for the application process because it depends on the applicant’s different proposed activity types. It is also highly recommended to have a legal expert to assist you with the application process, and the legal consultant’s fees vary according to the complexity of the application process.
The Documentation Needed to Apply for a Crypto License
The documentation required to support each application will depend on the proposed activity. For any application for an exchange platform, there are needed around 25 different documentations, along with more company data, including documents regarding all owners and directors, as well as the application itself. One should also be ready to disclose contracts with third-party providers.
Even though the number of documents needed to be filled in seems overwhelming, this shows very well what it takes to safely run an exchange platform. Most cryptocurrency users and experts assure applicants that these requirements are not exaggerated, arguing that this type of documentation has to be in place to make businesses operate safely.
Numerous attracting blockchain and crypto startup businesses have started to appear as one way of bolstering Gibraltar’s expanding financial services sector after the self-governing country left the European Union in 2020.
The territory has taken an outsized role in the crypto community, partnering with numerous blockchain and crypto startups to launch various platforms, including the Gibraltar Blockchain Exchange, the British protectorate’s first digital asset exchange and token sale platform.
If you’re invested in crypto, here is a list of five companies based in Gibraltar you need to get to know.
NKOR is a firm based in the British protectorate that’s created a blockchain platform for IP rights management. Intellectual property data can be uploaded to the NKOR website, where they are securely encrypted and recorded in the network.
The startup was first announced in mid-2017 and is led by CEO Eric Klein. By changing the way people record and get compensated for their intellectual property, the platform aims to create a growing ecosystem of people that are securely tracking their inventions on the blockchain.
Initially founded in Singapore, TraceTo is now one of the most famous companies in Gibraltar because it was the first startup to list its token and launch its corresponding token sale on the GBX, or Gibraltar Blockchain Exchange.
The platform describes itself as a ‘decentralized KYC (Know Your Customer) network that allows cryptocurrency organizations to include KYC best processes at each step of the customer experience. Crypto firms can store their customer information on smart contracts, which can then be viewed inside TraceTo’s software layer.
Transact Payments is a Gibraltar-based e-money platform offering services to enterprise businesses and consumers worldwide. It delivers a wide range of payment options for enterprise clients, such as a few cryptocurrency options. Within its payment platform, Transact Payments also offers crypto wallet services to help users secure their assets.
The company operates with full regulatory approval from the Gibraltar Financial Services Commission and is a qualified partner of Visa and MasterCard. Transact Payments has an extensive range of clients, including major financial institutions and small tech startup businesses.
Lendo is a fintech company that enables lenders to provide fiat loans for cryptocurrency collateral and a crypto banking ecosystem. After being founded in London, the firm has relocated to Gibraltar.
The platform enables anyone to loan out fiat to future crypto investors, or vice-versa. As an outcome of all lender and customer information being kept on the Lendo blockchain, load applications will be able to be processed almost instantly, even when investors are utilizing their crypto assets for collateral.
Dether is another company based in Gibraltar. This platform is a P2P network that makes it possible for anyone to buy and sells Ether (ETH) instantly. The Dether application and platform are ideal for crypto investors and purchasers looking to trade their fiat money for Etherm and vice-versa.
To appear as a seller or buyer on the Dether application, users can buy DTH tokens, which will have them on the ‘DTH Map,’ and qualify them to match with other users on the platform. Dether has also launched its public token sale, which raised almost 4K in ETH to fund platform development and enhanced hiring. The company has also received partial support from ConsenSys, the famous decentralized app developer.
The Bottom Line
Besides these Gibraltar-based companies, Gibraltar Stock Exchange (GSX) has also been working to offer a tokenized securities exchange solution and launched the Gibraltar Blockchain Exchange (GBX) platform. This exchange is Gibraltar’s first digital asset exchange and token sale platform, having a native currency known as the Rock Token (RKT).
The exchange platform functions under the Distributed Ledger Technology (DLT) regulations defined by Gibraltar’s government and is a subsidiary of the Gibraltar Stock Exchange.
The surge in interest in Gibraltar after the DLT legislation (Distributed Ledger Technology) and the ICO regulations significantly impact the country’s funds industry. Because of this and many other things, Gibraltar is considered one of the go-to locations for anything involving cryptocurrency or blockchain technology.
Gibraltar is one of the very few jurisdictions in the world where it is feasible to open a bank account for such activities. This makes it a given for entrepreneurs who wish to establish funds for investing in cryptocurrencies to consider Gibraltar as a jurisdiction in which to house their funds.
Gibraltar and Cryptocurrency
When establishing crypto funds, there are a few challenges, not the least of which is the volatility of the cryptocurrencies themselves. Investors are prone to lose fortunes as they are to make them by investing in this market. There is a demand among investors to have exposure to this asset class to be placed among their asset allocation’s riskier end. Thus, the Gibraltar Funds and Investment Association (GFIA) has created a special crypto fund committee to address these issues.
The committee’s first decision was to encourage Gibraltar’s industry to use Experienced Investor Funds (EIFs) as the regulatory rule for crypto funds, which can cut some costs. GIFA is set to ensure that these practices are not carried out in the crypto funds sector, other than in the few restricted cases where the fund includes only the money of a person and that is of the promoter.
The industry agrees that investors in cryptocurrency should be allowed the regulatory infrastructure and the protections that the EIF’s regulations deliver, along with the support of numerous EIF directors, fund administrators, and auditors, many of whom are obviously absent in the creation of some private funds.
Crypto Funds and the Code of Conduct
The crypto committee has also been figuring out an extension of the GIFA Code of Conduct to include aspects that should be considered by those involved in the sector when they are creating crypto funds. Among other issues, the code will manage custody of crypto assets, valuation, security, and corporate governance.
Although it may be probable that some funds drop in value because of the fluctuations of cryptocurrencies, GIDA wants to make sure that investors in Gibraltar crypto funds will be protected from cyber-security threats and danger associated with sub-effective corporate dominance.
Even though most of the morals that relate to the protection of investors in crypto funds can be drawn from the Code of Conduct, new regulations are set to help practitioners apply these principles to crypto assets. One instance is the provision that cryptocurrencies should be stored in digital wallets with multi-signatory functions.
Comply or Explain
According to GFIA, some of these principles should be included in crypto fund regulations as well. As it is with numerous other codes like this, the principle with the Code of Conduct is to ‘comply or explain.’
Simply put, the code recognizes that there may be situations in which the regulations that it sets out cannot be applied to an individual situation, and so, in that particular circumstance, an explanation should be delivered as to why the principles of the code have not been respected and followed.
The interest in Gibraltar funds has been initiated in other regions as well: traditional securities funds and algorithm funds are also being created. The funds industry is said to take advantage of this increasing interest, more so since funds professionals usually have the best abilities to make the ICO and DLT work. In short, the government of Gibraltar should be congratulated for delivering the regulatory infrastructure for this critical sector as per many in the cryptocurrency community.
The popular Gibraltar Blockchain Exchange – or GBX – is a token exchange platform that describes itself as a ‘world-leading institutional-grade token sale platform.’ The exchange also claims to be ‘built upon principles of decentralization and community consensus.’
GBX describes itself as a ‘crypto exchange unlike any other.’ The platform is actually a subsidiary of the Gibraltar Stock Exchange, a European Union-regulated stock exchange platform. That exchange (Gibraltar’s first stock platform) launched back in 2015, and a few years later, the stock exchange announced its intentions to use blockchain for a payment and settlement system. The company introduced its Gibraltar Blockchain Exchange platform to the world in August 2017, and during the following months, the firm took part in blockchain conferences around the world to make the exchange known.
How Does Gibraltar Blockchain Exchange Work?
There are numerous other cryptocurrency exchange platforms on the market today, so why do we need yet another exchange?
Gibraltar Blockchain Exchange intends to create a system that’s ideal for traditional investors. The developers’ aim was to create a cryptocurrency exchange that functions similar to a stock exchange platform. However, rather than listing any coins, for instance, GBX’s team wanted to actively vet new coins to make sure the investors are safe at all times. The ultimate goal is to ‘create a harbor for investors who are too nervous to brave the uncharted waters of the crypto markets.’
Simply put, the unique selling attribute of Gibraltar Blockchain Exchange is that it will thoroughly analyze new coins before adding them to the listing on the platform. A group called the GBX Alliance is set to form a consensus about each asset before having it listed on the website.
Other key features include assiduous whitelisting procedures and an innovative sponsor staking system. The investor pool is set to consist exclusively of KYC- or AML-cleared investors, which, overall, makes the exchange platform ‘the future of cryptocurrency trading.’ Lastly, the ecosystem revolves around an in-platform cryptocurrency called the Rock Token, or RKT.
How Does GBX’s Rock Token (RKT) Work?
The Rock Token (RKT) is the native currency for transactions, listings, and numerous other functions on the Gibraltar Blockchain Exchange platform. The token is the medium of exchange and the utility asset that powers the GBX/GSX ecosystem.
Some key features and functionalities of the token include:
- Pay for membership and management within the Gibraltar Blockchain Exchange platform
- Pay for sponsorships, listings, and fees on GBX
- Have access to banking services, including an order book for trading and acquire offline custodianship
- Vote on particular community developments
The token on the Gibraltar Blockchain Exchange platform has since undergone a one-to-one swap to the STACS token.
Gibraltar Blockchain Exchange vs. Gibraltar Stock Exchange
The Gibraltar Blockchain Exchange is called the GBX, while the Gibraltar Stock Exchange is referred to as GSX. The stock exchange platform was established back in 2014 and began to operate at full capacity in the first quarter of 2015. The platform is the first fully-licensed exchange in Gibraltar.
With the Gibraltar Blockchain Exchange, the company tries to expand in order to offer a curated selection of crypto coins and digital coins. At the same time, the stock exchange platform is meant to ‘fully integrate’ blockchain into its trading and settlement systems. So, basically, the stock exchange’s purpose is to embrace both cryptocurrencies and blockchain technology.
The Bottom Line
In conclusion, Gibraltar Stock Exchange – GSE – is Gibraltar’s first stock exchange platform, while Gibraltar Blockchain Exchange – GBX – is a separate trading platform for cryptocurrencies.
The Gibraltar Blockchain Exchange’s website lists a few reputable partners such as Kenetic Capital, PWC, Blockchain Lab, and BlockchainWorx.
The tiny country of Gibraltar has definitely taken a major role in the crypto community throughout the years. The British protectorate signed deals with numerous crypto startups just a while ago to launch a blockchain exchange platform on its shores. Then, it pushed strenuously to attract crypto startup businesses to its blockchain exchange and platforms.
Here are some of the most popular and reliable crypto companies and platforms in Gibraltar you should get to know.
Gibraltar Blockchain Exchange
Released in collaboration with the Gibraltar government, the Gibraltar Blockchain Exchange is the British territory’s first digital asset exchange platform and token sale website. Its native cryptocurrency is the Rock Token (RKT), with 60 million tokens worth approximately $6 million during GBX’s first token sale.
The platform runs under the Distributed Ledger Technology (DLT) regulations created by Gibraltar’s government and is a Gibraltar Stock Exchange subsidiary. The platform made headlines when it revealed the ICO TradeTo, the first token sale on GBX. The exchange is also actively racing other crypto exchange platforms in an attempt to become one of the leading token sale websites in Europe.
Acorn Collective is another Gibraltar-based business that’s trying to transform the space of crowdfunding by utilizing crypto and blockchain technology. Created and developed by a team of entrepreneurs, the platform allows anyone to offer equity in their project or firm in the form of tokens. The startup was launched in mid-2017 and has an active role in Gibraltar’s expanding crypto community. Besides being a crowdfunding platform, Acorn also provides legal and advisory services to any company raising funding via its platform.
Gibraltar-based ConnectJob is a business that’s impacting the global gig economy because of its blockchain-powered labor platform, which enables users to get rewarded in cryptocurrency in exchange for carrying out various tasks. The Ethereum-based platform launched back in 2017 and revealed its public ICO, raising over $7 million to fund the development of its service.
On ConnectJob, every engagement is linked to a smart contract, which tracks the history of each job in a clear and secure manner. After successfully completing jibs, users are rewarded in CJT tokens, which can be exchanged for fiat money.
A blockchain-based media streaming service, Current gives its users possibilities in how they want to pay for their streaming options. Current merges functionality from all popular streaming platforms, including YouTube, Spotify, and others in one place, and rewards users for streaming content and data they share, which is then shared with third-parties.
After streaming, users can get rewarded with CRNC tokens – the platform’s native currency – which can be exchanged for other crypto coins. The platform has a top-end advisory board as well, which include entrepreneur Mark Cuban and VC investor Sten Laureyssens.
MediBloc is attempting to disrupt the traditional healthcare space by using a collaborative, blockchain-powered data-sharing platform. The service allows users to sell their health data to scientists around the world and get rewarded in MED tokens, which are listed on a few cryptocurrency exchanges worldwide.
Moreover, patients have complete access and control over their information and are able to choose which pieces of their healthcare identity are shared with care providers and issuers. Based in Gibraltar, the service is actively targeting Asia for its first stage of development and has established partnerships with a few medical institutions across the continent to enable access to its platform information.
The Bottom Line
Gibraltar was one of the first states to have successfully passed legislation regarding cryptocurrency. This regulatory certainty is encouraging more entrepreneurs to shift their crypto services, platforms, and operations in Gibraltar.