Gibraltar Seeks to Expand Digital Asset Regulatory Principles


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Cryptocurrencies have been widely known for years, so many countries have already expressed their stance on it and enacted some laws about it. Gibraltar is one of the countries that are ready to support cryptocurrency projects. Whether it is an ICO or a cryptocurrency exchange, there is nothing to worry about if you follow the requirements set by the Gibraltar Financial Services Commission (GFSC). Crypto licenses in Gibraltar are very useful to do business here as they provide a stable legal business operation for blockchain-related companies.

Legislation regulating cryptocurrencies.

There are several ways to deal with cryptocurrencies. Depending on the legislation of each country, they are treated as money, property or virtual goods as securities. The legality of cryptocurrencies in Gibraltar is controversial and Gibraltar started working on their regulation back in 2014. So far, the legislation in Gibraltar has not focused on cryptocurrencies specifically, but on distributed ledger technology and its providers. This allows various blockchain projects and other types of DLT to be covered by a single piece of legislation, making regulation more universal.

Regulation of cryptocurrencies and blockchain projects in Gibraltar is handled by the Gibraltar Financial Services Commission (GFSC). On October 12, 2017, the GFSC introduced the Financial Services Act. This is the most important law for cryptocurrencies in Gibraltar. This law supports new blockchain projects and reduces the risk of investor fraud. To comply with the law, any company that uses distributed ledger technology must obtain a DLT license, which gives permission to offer various services.

Trading cryptocurrencies in Gibraltar and obtaining a DLT license.

The DLT license makes it possible for blockchain projects to legally operate in Gibraltar. To obtain a DLT license to work with cryptocurrencies, a project must submit an initial application, which costs £2,000. The GFSC will then evaluate the project and create a list of requirements that the company must meet. This process of obtaining a DLT license in Gibraltar can take time. To simplify the process, it may be helpful to assist with the following steps:

  • Reviewing the business plan;
  • Preparing the initial application;
  • Modifying the application based on comments received from the GFSC;
  • Submitting the final application and sending it to the GFSC.

To obtain a DLT license, the DLT provider (applicant) must have a comprehensible and fair business model that enables effective communication with customers, recognizes financial crime risks, has the necessary resources to achieve its goals, and protects its customers from taking unnecessary risks.

This cryptocurrency license must be maintained by paying annual fees. Obtaining a DLT license may seem like an expensive procedure, but it provides protection from various fees that blockchain companies often have to pay due to the uncertain status of their business in other countries.

Taxation of cryptocurrency projects in Gibraltar.

Taxes on cryptocurrencies vary from country to country and are often income-based. In Canada, taxes range from 25% to 50%. In Japan, taxes on cryptocurrency transactions range from 15% to 55%. Taxes in Gibraltar for cryptocurrency projects are among the benefits of doing business in this country. However, cryptocurrencies are not taxable, so cryptocurrency projects only have to pay a corporate tax of 10%. In addition, capital gains and dividends are not taxable. Also, if there is income from the company’s activities that is not related to what the DLT license covers, this income may also be tax deductible.

If 10% is too much for your business, there are some tax exemptions and incentives for new businesses in Gibraltar. To take advantage of these, certain requirements must be met, so it is advisable to find out more or speak to an advisor.

Setting up an ICO in Gibraltar

Although legislation to regulate ICOs is still under development, as a distributed ledger technology provider, you can easily launch an ICO. Therefore, conducting an ICO in Gibraltar is safe if you have a blockchain project license issued by the GFSC.

One of the issues with launching an ICO in Gibraltar is uncertainty about the future, as it is unclear how the evolving ICO legislation will regulate this type of project. In addition, additional licensing fees, ranging from $11,000 to $39,000, are a potential hurdle. However, since initial coin offerings typically seek a minimum threshold of at least $1,000,000, the fees are relatively small. In order not to overburden your project, you may consider seeking financial support.

The main advantage of choosing Gibraltar for an ICO is that you don’t have to worry about lawsuits or sudden accusations of fraud just because ICOs have a questionable reputation. In addition, the government supports both crowdfunding and cryptocurrencies, so Gibraltar, with a DLT license, is a great country for initial coin offerings.

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