Gibraltar has become a hub for crypto – now it wants to tackle attempts to manipulate the market

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Overseas British Territory wants to be a global hub for crypto firms.

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Gibraltar has unveiled new regulations for the cryptocurrency industry, aimed at potential market manipulation and internal transactions in a rapidly evolving space.

Overseas British Territories, located on the southern tip of Spain, on Wednesday issued an amendment to existing regulations requiring companies trading Bitcoin and other digital currencies to respect the integrity of the markets in which they operate.

In a guideline note for regulated crypto companies, the Gibraltar Financial Services Commission said firms must “fight against manipulation or undue influence of any behavior that is detrimental to price, liquidity or market information, or market integrity.”

“We had the first authority in 2018 to launch a legal and regulatory framework, and we now have the first authority to launch a framework for market integrity,” Albert Isola, Gibraltar’s Minister for Digital and Financial Services, told CNBC.

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

Gibraltar’s big blockchain ambition

Although probably known as a seaport and popular vacation spot, Gibraltar is the hub of many other industries, including financial services and gambling. Its latest move is part of an ongoing bid to pave the way for control of the digital currency industry.

Despite its small size, Gibraltar has a track record of developing rules for the crypto market. The region, which borders Spain but is under British control, introduced a licensing system in 2018 for blockchain firms.

Some fairly large names have set up shop in Gibraltar and received licenses from local regulators, including FTX, Huobi and Bullish, backed by Peter Thiel, co-founder of PayPal.

The executives of Binans, the world’s largest crypto exchange, also visited Gibraltar “a few months ago” but did not have a license, Isola said. After facing crackdowns in many countries last year, the company wants to be friends rather than enemies of regulators.

The Gibraltar Stock Exchange recently agreed to be acquired by Valerium, a blockchain firm to become the world’s first regulated market for shares and crypto trading. It aims to achieve this by creating an exchange for trading blockchain-based securities on the Six Swiss Exchange of Switzerland.

The latest rules come as various major world economies, including the United States and the United Kingdom, are now introducing new rules to regulate crypto.

“I think this is a sign that the judiciary is recognizing the need to do more,” Isola said. “And it needs to be done because there are more and more people being adopted.”

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

Transparency

Gibraltar has previously been criticized as a “tax haven”. Several major UK gambling companies, including Entain and 888, have set up shop on the rocky peninsula, in part because of its favorable tax system. Most recently, Gibraltar sought to distance itself from such a reputation.

The region is “fully compliant with all the standards of transparency and information exchange applicable in the United Kingdom,” Isola said, contradicting the description of Gibraltar as a tax haven. This type of transparency also applies to crypto, Isola added, meaning “higher bar of entry.”

Spain agreed last year to remove Gibraltar from its list of tax havens following a tax co-operation agreement with the United Kingdom. The issue has become a sticking point in London’s talks with Madrid following Britain’s withdrawal from the EU.

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