Bullish’s Gibraltar license – Q&A with Gibraltar Minister Albert Isola
Gibraltar is recognized as the world’s first jurisdiction to enact purpose-built legislation in support of Distributed Ledger Technology (DLT). In November 2021, Bullish (GI) Limited obtained a DLT license from the Gibraltar Financial Services Commission (GFSC), a key milestone ahead of its exchange launch.
Gibraltar Minister for Digital and Financial Services, Hon Albert Isola MP recently spoke to us, about the importance of regulations for consumer protection, market integrity and other topical issues on the regulation of digital assets.
1. Cryptocurrencies have reached a market capitalization of nearly $3 trillion, and institutions are increasingly embracing digital assets or exploring entry points. How can jurisdictions like Gibraltar maintain regulatory advantage while keeping pace with this explosive growth, and maintain protections for institutional and retail investors?
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I think the entire community requires us to provide consumers with a safety net and that safety net is regulation. And so, from 2018, we’ve been working with a regulated framework to provide those firms and the people investing and working with those firms to have the adequate levels of consumer protection and regulation that we can provide. The more that that is available to both institutions and the firms working in the space, I believe the quicker adoption will be expanded across the world. Because institutions will not invest, in my view, unless there is adequate and proper regulation in the space, which is a prerequisite to entry into the space.
The entire community requires us to provide consumers with a safety net and that safety net is regulation.
2. We understand that the Government of Gibraltar commissioned a working group with a view to introducing a 10th core principle which will focus on market integrity. What is the timeframe on this adoption, and why did you feel that this was needed?
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When we introduced the regulated framework in 2018, it became obvious to us that there would have to be changes made over the course of time if what we had developed was to remain fit for purpose. In our interaction with the regulator, we have found evidence across the world of the need to introduce a 10th pillar, the 10th principle, which is in market integrity. This will enable the regulator to have proper oversight to ensure that firms are not abusing the marketplace in any way whatsoever. We set out in this journey to create an environment, legal and regulatory, which would encourage and attract quality firms. Firms like Bullish, which are now launching in Gibraltar are here precisely because of that. They have confidence and trust in the regulatory framework. If we are going to continue to be fit for purpose, we need to stay at the cutting edge of that regulatory principle. And that’s why the 10th one is so relevant to us. It’s important, and I think it’ll serve consumers well in the future.
3. Gibraltar was the first jurisdiction to enact purpose-built legislation in support of DLT Providers, but since then, a number of other jurisdictions have emerged as competition. What plans does Gibraltar have to stay ahead of the game and develop your proposition further?
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I don’t regard the regulated framework as competition when other jurisdictions implement similar systems in their own countries. I think the more countries that introduce regulatory processes, systems and supervision for this industry, the better. What I have always said is that Gibraltar will not be shy about changing its own regulatory framework to remain at the cutting edge of what we need to do. And if that means looking at other jurisdictions and learning from them, then we shall certainly do that. If it means changing, we will change. We are totally committed to this space. And so, for us, the regulatory framework is a core part of that. And we will keep a very close eye on, for example, Markets in Crypto-Assets (MiCA) in the European Union, as they approach 2024 with their own new proposed framework. We are looking at what the Financial Action Task Force (FATF) is doing, and we’re complying with that.
So I think this is a lot of different multi-lateral organizations and countries working together in effect to produce a framework that works wherever you are in the world. This is only going to work to provide the levels of protection to the clients of firms like Bullish if we have a similar system around the world to control the entry point into the space. If we can do that, we will cut out a lot of the stuff that none of us want to see in it.
4. Some industry participants believe that having a single global regulator for cryptocurrency markets would spur regulatory integration and spur growth and adoption of digital assets. What do you think?
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I think international standards are critical and essential, but I think a single regulator around the world would simply not work. If you look at what we’ve done in financial services, there are different regulators, different ideas, different processes. For example, if you were to wait for that to happen, there are parts of the world where this activity is completely illegal. Every country has got their own issues and their own agendas. And so, to believe that there is a hope of a single regulator around the world to deal with the space in my view is just simply not possible. And therefore, what we each need to do is contribute to those international standards by developing our own regulatory frameworks, which when you look at them, will combine to provide a minimum set of standards that should be applicable all around the world. But that’s very different from having a single regulator to cover this industry the world over. I don’t think that’s possible, would ever happen or feasible.
And therefore, I think countries like ours require keep pushing to encourage innovation, to encourage to work with quality firms. I mean, if you would’ve asked me in 2018, what my ambition in Gibraltar was, it would’ve been to attract firms like Bullish to the jurisdiction. So, what we are doing is working and we’re all swimming in the same direction, which is excellent.