As part of the World Trade Center Gibraltar’s ongoing campaign featuring “the Rock’s” many attractive opportunities for FinTech and FinServ companies, I went looking for local experts who could speak authoritatively on Gibraltar’s DLT landscape.

Anthony Provasoli is a Partner and FinTech Department Co-Lead at Hassans International Law Firm Limited, based in Gibraltar. Both Chambers’ and Legal 500 rank him as a Band 1 or Tier 1 leading lawyer in the Fintech industry (which means he is categorised as “the best”, for those laymen among us).

He is also one of the first individuals to have lobbied the Gibraltar Government and the Gibraltar Financial Services Commission (GFSC) for the regulation of Virtual Asset Service Providers back in 2014. He was involved in the consultation process to bring about Gibraltar’s highly innovative DLT Regulatory Framework and was also amongst a group of individuals who personally assisted in drafting the Guidance Notes for those landmark DLT Regulations which came into force in January 2018.

I called Anthony up and asked him to tell me the story of how it all began.

“That was when I became aware of how significant the [cryptocurrency] industry already was and how much potential it had to grow exponentially,” Anthony told me. “All the people there were very passionate about it. I was already hooked myself on it, as well as
on how Gibraltar could get involved as a jurisdiction.”

The problem was that there was no clearly defined industry rubric for DLT and blockchain at the time. It was FinTech-related, but it didn’t fit precisely within any of the other regulatory regimes.

Inspired by the potential of the technology, Anthony began his quest to bring DLT to Gibraltar and, after much work, was finally rewarded with a highly positive response from the Gibraltarian government and regulator to get regulations in place and bring DLT to Gibraltar properly.

What followed was the establishment of a special DLT team inside the GFSC — the Gibraltar Financial Services Commission — which would take on the role of understanding this new technology.

The rest, as they say, is history, dotted by such momentous milestones as the arrival of the esteemed regulatory and IT professional, Siân Jones, to assist in getting the regulations worked out, as well as Hassans’ and other firms’ assistance in putting together the Guidance Notes for what would eventually become known as the Nine Principles of DLT.

The result was an innovative approach to DLT regulation which was neither prescriptive nor damaging to innovation, in a field which is inherently innovative by nature.

A DLT company can choose to be regulated in Gibraltar. The benefit of being regulated, of course, is that it ensures the company is implementing all the best practices, which helps both clients and the DLT company itself.

“You don’t necessarily need to be a high profile or well-established business [to get permission to operate],” Anthony said. “The GFSC is happy to sit down with big players such as eToro and Huobi, but at the same time is also willing to sit down with smaller and newer DLT-focused businesses.”

“We’re working with a few big names, and a number of exciting start-ups, at the moment who haven’t received their permissions yet.”

In our previous interview with regulatory expert Targ Patience, he told us a similar story.

DLT companies are flocking to the Rock, while other jurisdictions scramble to get some sort of framework in place which resembles what Gibraltar has had for years.

But they keep coming up short.

“Gibraltar was the first jurisdiction in Europe, and one of the first in the world, to specifically regulate DLT financial services business,” Anthony said. “Gibraltar’s legislation came into force in January 2018, with the bill being passed into law several months earlier.”

In comparison, Malta’s bill was not passed until July of 2018.

“Gibraltar stole the march somewhat,” he said. “Soon thereafter, other jurisdictions in Europe such as [Malta] and then Estonia, started working on their own regulatory frameworks and they started to get a lot of interest, but none has been as successful as the Gibraltar model in my view. We’ve also been getting a lot of clients who have started the process of setting up in other jurisdictions and applying for the relevant regulatory permissions but eventually growing frustrated and moving to Gibraltar.”

“In my view, none of the regulations out there even come close to the Gibraltarian model, because the Gibraltar model was specifically designed for this type of business.

“Now the EU is talking about potential regulation of Virtual Asset Service Providers and a proposal for EU wide regulation of crypto assets was recently leaked on social media. It is merely a proposal at this stage, however, and it will be several years before this proposed regulatory framework is developed to a point where it can be brought into force. It is interesting that a lot of the regulatory requirements being put forward in this proposal are already covered by Gibraltar’s DLT Regulatory framework which has been in place for a number of years already but it is also important that Gibraltar keeps a close eye on how the industry is evolving, so as to ensure that our regulations remain relevant and appropriate. As part of the executive committee at the Gibraltar Association of New Technologies (GANT) we are working towards this constantly.”

“Gibraltar regulations go beyond other existing regulatory models out there. They go much further. They look at the financial resources that the firms have in place and whether they have the relevant experience and expertise to operate a regulated crypto business. They look at how they protect the consumer, how they safeguard the customer’s funds, what their disaster recovery procedures are, etc.”