Gibraltar Introduces New Cryptocurrency Rules Against Market Manipulation

The British Overseas Territory wants to become a global hub for crypto businesses.

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Gibraltar has unveiled new regulations for the cryptocurrency industry, targeting potential market manipulation and insider trading in the rapidly evolving space.

The British Overseas Territory, located in the southern tip of Spain, on Wednesday published an amendment to existing regulations requiring companies that trade in bitcoin and other digital currencies to respect the integrity of the markets in which they operate.

In a guidance note for regulated crypto businesses, the Gibraltar Financial Services Commission says businesses should combat “manipulating or unduly influencing prices, liquidity or market information, or any other behavior that is detrimental to the integrity of the market.

“We were the first jurisdiction in 2018 to launch the legal and regulatory framework, and now we are the first jurisdiction to launch a framework for market integrity,” Albert Isola, Gibraltar’s minister for financial and digital services, told CNBC.

“The more there is around the world in terms of international standards for this space, the more trust, the more use and the more adoption we will have around the world,” he added.

Gibraltar’s Big Blockchain Ambitions

While perhaps best known as a seaport and popular vacation spot, Gibraltar is a hub for a number of other industries, including financial services and gambling. His latest move is part of an ongoing attempt to lead the way in regulating the digital currency industry.

Despite its small size, Gibraltar has a history of developing rules for the crypto market. The region, which borders Spain but is under British control, first introduced a licensing regime for blockchain companies in 2018.

Some pretty big names have set up shop in Gibraltar and obtained licenses from local regulators, including FTX, Huobi and Bullish, which is backed by PayPal co-founder Peter Thiel.

Executives from Binance, the world’s largest cryptocurrency exchange, also visited Gibraltar “a few months ago” but are not licensed, Isola said. The company is seeking to become a friend rather than an enemy of regulators after facing crackdowns in numerous countries last year.

The Gibraltar Stock Exchange recently agreed to be acquired by Valereum, a blockchain company, in a bid to become the world’s first regulated exchange for stock and cryptocurrency trading. It is a goal that Switzerland’s SIX Swiss Exchange is also seeking to achieve with the creation of an exchange to trade blockchain-based securities.

The latest rules come as a number of the world’s major economies, including the US and UK, are now introducing new rules to bring cryptocurrencies into the regulatory fold.

“I think it’s a sign that more and more jurisdictions recognize the need to do it,” Isola said. “And the need to do it is because there are more and more adoptions.”

However, Isola insisted that Gibraltar “is not doing this to market ourselves”, adding: “We want a very small but quality number of companies within our jurisdiction.”

Transparency

Gibraltar has previously been criticized for being a “tax haven”. Several of the UK’s leading gaming companies, including Entain and 888, have set up shop on the rocky peninsula, in part due to its favorable tax regime. More recently, however, Gibraltar has tried to distance itself from such a reputation.

The region “fully complies with all applicable UK transparency and information sharing standards,” Isola said, adding that this does not align with descriptions of Gibraltar as a tax haven. Such transparency standards also apply to cryptocurrencies, Isola added, meaning “the bar for entry is high.”

Spain agreed last year to remove Gibraltar from its list of tax havens after reaching a tax cooperation agreement with the UK. The issue has been a sticking point in London’s negotiations with Madrid following Britain’s withdrawal from the EU.

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