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Gibraltar

Retail_Trading_Status

Allowed-Regulated Unknown
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Analysis ID
#9
Version
Archived
Created
2025-04-12 06:36
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Live

Executive Summary

Gibraltar is a crypto-friendly jurisdiction that permits regulated retail trading of cryptocurrencies. The primary regulator, the Gibraltar Financial Services Commission (GFSC), oversees intermediaries through the DLT Regulatory Framework under the Financial Services Act 2019. Key requirements include licensing for DLT providers and registration as VASPs under the Proceeds of Crime Act 2015 for AML/CFT/CPF compliance. The approach focuses on supervising intermediaries rather than prohibiting individual participation.

Key Pillars

The primary regulator is the Gibraltar Financial Services Commission (GFSC), which oversees Distributed Ledger Technology (DLT) providers and Virtual Asset Service Providers (VASPs). Core compliance requirements include Anti-Money Laundering (AML), Counter-Terrorist Financing (CFT), and Counter-Proliferation Financing (CPF) regulations under the Proceeds of Crime Act 2015. Licensing is required for firms using DLT to store or transmit value belonging to others, while VASP registration is required for certain crypto-related activities.

Landmark Laws

  • Financial Services Act 2019 (FSA): Provides the overarching legal framework, incorporating the DLT Regulatory Framework.
  • Financial Services (Distributed Ledger Technology Providers) Regulations 2017/2020: Initially established the DLT Regulatory Framework, mandating licenses for firms using DLT.
  • Proceeds of Crime Act 2015 (POCA): Addresses Anti-Money Laundering (AML), Counter-Terrorist Financing (CFT), and Counter-Proliferation Financing (CPF) risks.
  • Proceeds of Crime Act 2015 (Relevant Financial Business) (Registration) Regulations 2021: Requires certain firms, such as token issuers, to register with the GFSC as Virtual Asset Service Providers (VASPs) for AML purposes.
  • Proceeds of Crime Act 2015 (Transfer of Virtual Assets) Regulations 2021: Implements the FATF's Travel Rule, mandating the collection and exchange of originator and beneficiary information for virtual asset transfers above EUR 1,000 between VASPs; in force since March 22, 2021.

Considerations

Cryptocurrencies are not regulated as legal tender or specific financial instruments unless a token qualifies as a security under existing laws. The regulatory framework aims to mitigate risks related to Anti-Money Laundering (AML), Counter-Terrorist Financing (CFT), and Counter-Proliferation Financing (CPF). The GFSC issues public warnings regarding unauthorized firms to protect consumers.

Notes

Gibraltar established a purpose-built regulatory framework for businesses utilizing Distributed Ledger Technology (DLT) effective since January 1, 2018. The GFSC's regulatory objectives under the FSA include 'The protection of consumers.' The Gibraltar Financial Services Commission (“GFSC”) issued a warning in March 2023 regarding a website offering DLT services without authorization or AML/CFT registration.

Detailed Explanation

Gibraltar operates as a 'Allowed-Regulated' jurisdiction for retail cryptocurrency trading. Since January 1, 2018, Gibraltar has been a pioneer in establishing a regulatory framework for businesses using Distributed Ledger Technology (DLT). Individual citizens and residents are legally permitted to buy, sell, and hold cryptocurrencies; the focus is on regulating the intermediaries. The core of Gibraltar's approach is the DLT Regulatory Framework, initially under the Financial Services (Distributed Ledger Technology Providers) Regulations 2017/2020 and now integrated within the Financial Services Act 2019 (FSA). This requires firms 'carrying on by way of business, in or from Gibraltar, the use of distributed ledger technology (DLT) for storing or transmitting value belonging to others' to obtain a DLT Provider license from the Gibraltar Financial Services Commission (GFSC). This covers cryptocurrency exchanges and custodial wallet providers. The regulatory approach is principles-based and outcomes-focused, balancing flexibility with consumer protection, market integrity, and financial crime prevention. Licensed DLT Providers must adhere to ten core principles, covering areas such as honesty and integrity, customer care, financial and non-financial resources, risk management, protection of client assets, corporate governance, cybersecurity, financial crime prevention (including AML/CFT/CPF), resilience, and market integrity.

Beyond DLT licensing, Gibraltar has specific regulations under the Proceeds of Crime Act 2015 (POCA) to address Anti-Money Laundering (AML), Counter-Terrorist Financing (CFT), and Counter-Proliferation Financing (CPF) risks. Firms in crypto-related activities, even without a full DLT license (such as token issuers or OTC desks), must register with the GFSC as Virtual Asset Service Providers (VASPs) under the Proceeds of Crime Act 2015 (Relevant Financial Business) (Registration) Regulations 2021. This subjects them to AML/CFT/CPF supervision, requiring robust Know Your Customer (KYC) and due diligence. Gibraltar has also implemented the FATF's Travel Rule via the Proceeds of Crime Act 2015 (Transfer of Virtual Assets) Regulations 2021, mandating the collection and exchange of originator and beneficiary information for virtual asset transfers above EUR 1,000 between VASPs, reinforcing the AML/CFT framework since March 22, 2021. The GFSC actively supervises licensed and registered entities and issues public warnings regarding unauthorized firms. Cryptocurrencies themselves are not regulated as legal tender or specific financial instruments unless a token qualifies as a security under existing laws. Therefore, retail trading is allowed within a regulated environment where service providers are subject to licensing, registration, and stringent AML/CFT compliance obligations.

Summary Points

Here's a bullet-point summary of the report on Retail_Trading_Status in Gibraltar, designed for quick comprehension:

Retail Cryptocurrency Trading Status in Gibraltar: Regulatory Overview (April 12, 2025)

I. General Status:

  • Allowed-Regulated: Retail cryptocurrency trading (buying, selling, and holding) is permitted for individuals in Gibraltar, but within a regulated environment.

II. Key Regulatory Bodies:

  • Gibraltar Financial Services Commission (GFSC):
    • Primary regulator for DLT Providers and VASPs.
    • Issues licenses and registrations.
    • Supervises compliance.
    • Issues public warnings about unauthorized firms.
  • Role: Consumer Protection, Market Integrity, and Prevention of Financial Crime.

III. Important Legislation and Regulations:

  • Financial Services Act 2019 (FSA):
    • Integrates the DLT Regulatory Framework.
  • Financial Services (Distributed Ledger Technology Providers) Regulations 2017/2020:
    • Establishes the DLT Regulatory Framework.
  • Proceeds of Crime Act 2015 (POCA):
    • Addresses AML/CFT/CPF risks associated with virtual assets.
  • Proceeds of Crime Act 2015 (Relevant Financial Business) (Registration) Regulations 2021:
    • Requires Virtual Asset Service Providers (VASPs) to register with the GFSC for AML/CFT/CPF supervision.
  • Proceeds of Crime Act 2015 (Transfer of Virtual Assets) Regulations 2021:
    • Implements the FATF's Travel Rule.

IV. Requirements for Compliance:

  • DLT Provider License:
    • Required for firms "carrying on by way of business, in or from Gibraltar, the use of distributed ledger technology (DLT) for storing or transmitting value belonging to others."
    • Applies to cryptocurrency exchanges and custodial wallet providers.
  • VASP Registration:
    • Required for firms engaging in certain crypto-related activities, even if not requiring a full DLT license (e.g., token issuers, OTC desks).
  • AML/CFT/CPF Compliance:
    • Robust Know Your Customer (KYC) and due diligence procedures.
    • Compliance with the Proceeds of Crime Act 2015 and subsidiary legislation.
  • FATF Travel Rule Compliance:
    • Collection and exchange of originator and beneficiary information for virtual asset transfers above EUR 1,000 between VASPs.
  • Ten Core Principles for DLT Providers:
    • Honesty and Integrity
    • Customer Care
    • Financial and Non-Financial Resources
    • Risk Management
    • Protection of Client Assets
    • Corporate Governance
    • Cybersecurity
    • Financial Crime Prevention (including AML/CFT/CPF)
    • Resilience
    • Market Integrity

V. Notable Restrictions or Limitations:

  • Cryptocurrencies are not regulated as legal tender or specific financial instruments (unless a token qualifies as a security under existing laws).
  • Focus is on regulating the intermediaries and platforms, not prohibiting individual participation.

VI. Recent Developments or Changes:

  • Implementation of the FATF Travel Rule (Proceeds of Crime Act 2015 (Transfer of Virtual Assets) Regulations 2021).
  • Ongoing supervision by the GFSC of licensed and registered entities.
  • Active issuance of public warnings regarding unauthorized firms.

Full Analysis Report

Report: Retail Cryptocurrency Trading Status in Gibraltar

Date: April 12, 2025

Prepared by: Financial Regulatory Analyst

Topic: Retail_Trading_Status

Description: Assess whether individual citizens and residents in the country are legally permitted to buy, sell, and hold cryptocurrencies. Detail the regulatory environment surrounding this activity (e.g., KYC/AML requirements imposed on platforms, general warnings issued)

1. Current Status: Allowed-Regulated

2. Narrative Explanation:

Gibraltar has established itself as a pioneering and crypto-friendly jurisdiction, being one of the first globally to introduce a purpose-built regulatory framework for businesses utilizing Distributed Ledger Technology (DLT), effective since January 1, 2018. Individual citizens and residents in Gibraltar are legally permitted to buy, sell, and hold cryptocurrencies. The regulatory focus is not on prohibiting individual participation but on supervising the intermediaries and platforms that facilitate these activities.

The cornerstone of Gibraltar's approach is the DLT Regulatory Framework, initially established under the Financial Services (Distributed Ledger Technology Providers) Regulations 2017/2020 and now integrated within the Financial Services Act 2019 (FSA). This framework mandates that any firm "carrying on by way of business, in or from Gibraltar, the use of distributed ledger technology (DLT) for storing or transmitting value belonging to others" must obtain a DLT Provider license from the Gibraltar Financial Services Commission (GFSC). This explicitly covers entities like cryptocurrency exchanges and custodial wallet providers operating within or from the jurisdiction.

The regulatory approach is principles-based and outcomes-focused, designed to be flexible and adapt to the evolving technology while ensuring key objectives like consumer protection, market integrity, and the prevention of financial crime are met. There are ten core principles that licensed DLT Providers must adhere to, covering areas such as honesty and integrity, customer care, financial and non-financial resources, risk management, protection of client assets, corporate governance, cybersecurity, financial crime prevention (including AML/CFT/CPF), resilience, and market integrity.

Beyond the DLT licensing regime, Gibraltar implemented specific regulations under the Proceeds of Crime Act 2015 (POCA) to address Anti-Money Laundering (AML), Counter-Terrorist Financing (CFT), and Counter-Proliferation Financing (CPF) risks associated with virtual assets. Firms engaging in certain crypto-related activities, even if not requiring a full DLT license (such as token issuers or OTC desks), must register with the GFSC as Virtual Asset Service Providers (VASPs) under the Proceeds of Crime Act 2015 (Relevant Financial Business) (Registration) Regulations 2021. This registration subjects them to AML/CFT/CPF supervision, requiring robust Know Your Customer (KYC) and due diligence procedures.

Gibraltar has also implemented the FATF's Travel Rule via the Proceeds of Crime Act 2015 (Transfer of Virtual Assets) Regulations 2021, which mandates the collection and exchange of originator and beneficiary information for virtual asset transfers above a certain threshold (EUR 1,000) between VASPs, further strengthening the AML/CFT framework.

The GFSC actively supervises licensed and registered entities and issues public warnings regarding unauthorized firms claiming to operate from Gibraltar or misusing its name, thereby reinforcing consumer protection. While cryptocurrencies themselves are not regulated as legal tender or specific financial instruments (unless a token qualifies as a security under existing laws), the activities surrounding their exchange, custody, and transmission by businesses are clearly regulated. Therefore, retail trading is allowed but occurs within a regulated environment where service providers are subject to licensing, registration, and stringent AML/CFT compliance obligations.

3. Supporting Excerpts:

  • On Legality and Regulatory Approach: "Gibraltar has a positive and welcoming attitude towards cryptocurrencies and blockchain technology. Gibraltar has been proactive in creating a favourable regulatory environment for crypto-related businesses. This is illustrated by the enactment of the Financial Services (Distributed Ledger Technology) Regulations (“DLT Regs”). Gibraltar became the first jurisdiction to provide a clear and comprehensive regulatory framework for blockchain and cryptocurrency businesses." (Source: Global Legal Insights, Oct 2024) [3]
  • On DLT Licensing: "Since the 1st January 2018, any firm carrying out by way of business, in or from within Gibraltar, the use of distributed ledger technology (DLT) for storing or transmitting value belonging to other, needs to be authorised by the GFSC as a DLT provider." (Source: CMS Law, accessed Apr 2025) [2] / (Source: 21 Analytics, accessed Apr 2025) [12]
  • Scope of DLT Regulation: "The DLT Regs seek to regulate firms that store or transmit value (i.e. cryptocurrencies) belonging to others using blockchain technology (i.e. DLT) from Gibraltar. In its rawest form, the DLT Regs seek to capture entities that are providing exchange services and/or custodian services." (Source: Global Legal Insights, Oct 2024) [3]
  • VASP Registration for AML: "Under the Proceeds of Crime Act 2015 (Relevant Financial Business) (Registration) Regulations 2021, a person is now required to register with the GFSC before selling digital assets where they carry on business in or from Gibraltar... This is commonly referred to as a VASP registration." (Source: Global Legal Insights, Oct 2024) [3] / "The VASP regime requires certain firms, such as token issuers, to register with the GFSC for AML purposes." (Source: Hassans Law Firm / Gibraltar Finance, accessed Apr 2025) [15]
  • AML/CFT Requirements: "Firms operating within this space are also required to comply with local anti-money laundering (“AML”), counter-terrorist financing (“CFT”) and counter-proliferation financing (“CPF”) rules and regulations contained within the Proceeds of Crime Act 2015 (“POCA”) and its subsidiary legislation." (Source: Global Legal Insights, Oct 2024) [3]
  • Travel Rule Implementation: "The Proceeds of Crime Act 2015 (Transfer of Virtual Assets) Regulations 2021 (POCA) implemented the crypto Travel Rule and has been in force since March 22, 2021." (Source: Notabene, accessed Apr 2025) [8]
  • Consumer Protection Objective: One of the GFSC's regulatory objectives under the FSA is "The protection of consumers." (Source: GFSC Guidance Note, accessed Apr 2025) [4]
  • GFSC Warnings: "The Gibraltar Financial Services Commission (“GFSC”) is issuing a warning regarding the website [...] The provision of services surrounding DLT is a regulated activity requiring authorisation from the GFSC and exchange of cryptocurrency is a registered activity requiring registration with the GFSC for AML/CFT Supervision. This website [...] is not authorised or registered with the GFSC..." (Source: GFSC News, Mar 2023) [7]

4. Source URLs:

  • [2] CMS Expert Guide to Crypto Regulation Gibraltar: https://cms.law/en/int/expert-guides/cms-expert-guide-to-crypto-regulation/gibraltar (Accessed via Search Results)
  • [3] Global Legal Insights - Blockchain & Cryptocurrency Laws and Regulations 2025 – Gibraltar: https://www.globallegalinsights.com/practice-areas/blockchain-laws-and-regulations/gibraltar (Accessed via Search Results)
  • [4] GFSC Guidance Note - Scope of the DLT Framework: https://www.gfsc.gi/sites/default/files/2023-03/Scope%20of%20the%20DLT%20Framework.pdf (Accessed via Search Results / Direct Link inferred)
  • [5] Gibraltar Finance - The Distributed Ledger Technology Regulatory Framework (DLTRF): https://www.gibraltarfinance.gi/financial-services/distributed-ledger-technology (Accessed via Search Results)
  • [6] ISOLAS LLP - Gibraltar's Regulatory Framework for DLT (via Mondaq): https://www.mondaq.com/gibraltar/fin-tech/719514/gibraltar39s-regulatory-framework-for-distributed-ledger-technology-and-its-proposals-for-token-sale-regulations (Accessed via Search Results)
  • [7] GFSC News - Warning regarding onlycrypto-exchange.com: https://www.gfsc.gi/news/warning-regarding-httpsonlycrypto-exchangecom-526 (Accessed via Search Results)
  • [8] Notabene - Travel Rule Crypto in Gibraltar by the GFSC [2025]: https://notabene.id/crypto-travel-rule-compliance-gibraltar (Accessed via Search Results)
  • [9] Hassans Law Firm - DLT Regulation in Gibraltar – The Ten Principles: https://www.gibraltarlaw.com/insights/dlt-regulation-in-gibraltar-the-nine-principles/ (Note: Title refers to 9, but content likely updated or search result shows 10th principle text) (Accessed via Search Results)
  • [10] Gibraltar Finance - Cryptofunds: https://www.gibraltarfinance.gi/investment-funds/cryptofunds (Accessed via Search Results)
  • [12] 21 Analytics - Gibraltar Crypto Travel Rule: GFSC Requirements | 2025: https://www.21analytics.io/crypto-travel-rule-compliance/gibraltar/ (Accessed via Search Results)
  • [13] Gofaizen & Sherle - How to get a Crypto license (DLT license) in Gibraltar: https://gofaizen-sherle.com/crypto-license/gibraltar (Accessed via Search Results)
  • [15] Hassans Law Firm / Gibraltar Finance - Gibraltar's Noteworthy Crypto Offering (PDF link inferred): https://www.gibraltarlaw.com/download/gibraltars-noteworthy-crypto-offering/ (Accessed via Search Results)
  • [16] Library of Congress - Regulatory Approaches to Cryptoassets: Gibraltar: https://www.loc.gov/law/help/crypto/gibraltar.php (Accessed via Search Results)
  • [17] Triay Lawyers - Blockchain & Cryptocurrency Regulation - Gibraltar (via GLI): https://www.globallegalinsights.com/practice-areas/blockchain-laws-and-regulations/gibraltar (Same as [3], different access point) (Accessed via Search Results)
  • [19] Prifinance - Crypto Regulation in Gibraltar 2025: https://prifinance.com/en/insights/articles/crypto-regulation-in-gibraltar/ (Accessed via Search Results)
  • [21] Ramparts Law - New chapter on Gibraltar's crypto-asset regulatory regime: https://ramparts.gi/news/new-chapter-on-gibraltars-crypto-asset-regulatory-regime/ (Accessed via Search Results)

End of Report

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