With the recent upsurge of Initial Coin Offerings (ICOs), government watchdogs have had to go through a lot of trouble trying to figure out how best to deal with this digital phenomenon. This has even led to some countries like China banning the use of blockchain technology entirely. However, the government of Gibraltar seems to have focused its energies on providing details on how best to regulate ICOsm according to a white paper released on Tuesday.
According to the details of the paper, most tokens are not classified as securities either under the laws of Gibraltar or the EU. The paper goes on to say that in most cases the tokens stand for the advance sale of products, which ensures that the holders get access to future networks or use services in future. In short, the document sought to clarify that tokens are not securities but commercial products
Additionally, the white paper gave details on sponsors authorized to ensure that each issuer of an ICO distributing or selling token in Gibraltar appoints someone to do the supervision of the sale to make sure that it works within the regulations.
Setting Regulatory Boundaries for Blockchain
It should be noted that this release comes at a time when there is a ongoing effort to establish regulatory boundaries that will ensure the smooth running and the use of blockchain technology within the UK crown dependency.
In February, officials from the Gibraltar Financial Services Commission and the Gibraltar Finance Center told Coindesk that the sponsorship regime’s implementation was part of their approach to ICOs through market driven strategies. This, in essence, was an attempt to do away with the previous one-size-fits-all strategy. According to the document therefore, the regime would mean that the determination of whether a token sale is reliable or not, would be done by the market and not the regulators.
In December, Gibraltar legislators passed a bill focusing on blockchain and laid the foundation for an ICO bill during the publishing of an advisory report in September. By the end of the year, Gibraltar hopes to have wrapped up its blockchain-related regulatory push. The paper says:
A draft Bill is expected to be ready by the end of March 2018. Draft Regulations for the promotion, sale and distribution of tokens should be ready in May 2018. The last of the three Regulations should be completed by the end of October 2018,
What do you think about the move by the Gibraltar government to classify ICOs as commercial products? Are they justified? What could the implication of the regulation be? Let us know your views in the comments section below.