One of the smallest countries in Europe, Gibraltar, was an integral part of the British Empire for a long time. When we first look at the map and territory of Gibraltar, there is nothing to expect from this state, considering the fact it is very small. However, in recent years Gibraltar proved to be a lucrative market for foreign investors.
The state also managed to incorporate one of the most successful crypto regulations in the world. A little bit of a surprise for such a small country, but the crypto regulations are probably the friendliest in Europe.
How it all started?
The main regulatory board of Gibraltar GFSC made an unprecedented decision at the end of 2017. All companies using Blockchain technology in Gibraltar should go through a licensing procedure. Also, from January 1, 2018, new requirements for the conduct of activities by blockchain companies entered into force. And we should keep in mind that cryptocurrency transactions are not limited to individuals.
Why did Gibraltar attract crypto so much?
There have been several factors for the prevalence of crypto in Gibraltar. First, it became way easier for citizens to conduct transactions safely, rapidly, and anonymously without any hindrance. Secondly, the online casino industry is gradually gaining a foothold in the country, and a lot of casinos, offering payments in cryptocurrencies have emerged. The citizens of the country find it easier and convenient to play internet blackjack, poker, slots, or other games through depositing cryptos. No surprise because Bitcoin-powered games are becoming popular not only in Gibraltar but also in the whole world as well. And finally, crypto was a unique alternative for them to the physical money.
Suitable jurisdiction for crypto
Gibraltar is also considered proper jurisdiction for crypto funds. Firstly, the laws of Gibraltar provide flexibility in the choice of the legal form of funds (as, for example, in the UK and Ireland) and implement EU directives, which means that it is possible (at least until the UK leaves the EU) to publicly offer shares of the crypto fund to residents of the EU without registering the prospectus in each EU member state.
Secondly, like the Cayman Islands, Gibraltar allows for tax neutrality – the fund’s profits from investing or trading in crypto assets can, under certain circumstances, be exempted from corporate taxation.
Finally, Gibraltar is taking active steps to regulate the blockchain and crypto industry. Starting January 1, 2018, entrepreneurial activities are subject to licensing, including the storage and turnover of assets using the distributed ledger technology (DLT). The adoption of a package of laws on the regulation of activities with crypto assets, including the initial offer of crypto tokens (ICOs) and their secondary circulation on crypto exchanges, is in the process of adoption. Such novelties attract crypto funds, because in a regulated environment it is easier for them to open bank accounts, and on regulated crypto exchanges it is easier for them to predict the risks of their cryptocurrency operations.
At the same time, the new regulation (DLT, ICO) does not increase the regulatory burden of the crypto fund. Both the DLT license and future ICO requirements do not apply to crypto funds that have received the traditional GFSC (Gibraltar Financial Services Commission) permission to issue collective investment units.
Also, one of the most attractive jurisdictions for crypto business investors is Gibraltar. Despite its small size, the country has achieved great success in the gambling sector, and also intends to achieve achievements in the field of crypto business development. Although cryptocurrency is not a legal means of paying for goods and services in Gibraltar, the regulator can issue a license that will allow an entrepreneur to engage in crypto exchange in the country. The authorities of Gibraltar are constantly working to improve the regulatory standards and rules of the crypto sector.
While there are people who are against all of the regulations regarding crypto, we can say that Gibraltar managed to find a golden ration for crypto and regulations alike. Yet, the lack of regulation makes crypto what it is, but in the case of Gibraltar, we were persuaded in the opposite.