The crypto regulation document in Gibraltar will require cryptocurrency companies to conduct due diligence on and prevent insider trading and market manipulation.
Gibraltar, a British overseas territory, has introduced a new regulatory framework for providers of distributed ledger technology (DLT) services. The document goes into detail about the responsibilities of cryptocurrency businesses in the face of market manipulation and insider trading threats.
Gibraltar’s government published the 10th Regulatory Principle for the country’s financial services regulation on April 27. The specifics are contained in a Guidance Note issued by the Gibraltar Financial Services Commission (GFSC), the territory’s chief financial regulator.
The regulation, which was developed by a special working group comprised of government officials and industry professionals, establishes operational guidelines for preventing market abuse. Providers of DLT are expected to monitor the movement of significant virtual asset holdings, the publication of information that may be used to generate false or misleading market signals, and the use of algorithmic-based systems to generate deceptive data about transaction volumes.
Additionally, the regulation requires cryptocurrency companies to investigate and prevent insider trading and to notify the public of any relevant information “as soon as possible.” Additionally, proposed trading standards include measures to limit the ability of liquidity providers and market makers to significantly alter asset prices.
Gibraltar’s Minister for Digital and Financial Services, Albert Isola, expressed confidence that the new measures will help the jurisdiction maintain its already robust relationship with the cryptocurrency sector. Isola said:
“The introduction of the 10th Principle, with significant input from industry, will develop further our regulatory framework. It provides permission firms with clear guidance on the standards that are required of them as well as providing consumer and jurisdictional protection.”
One of the working group’s leaders, fintech attorney Joey Garcia, lauded Gibraltar’s efforts to comply with FATF recommendations:
“It is great to see […] Gibraltar lead in setting standards, particularly when the FATF has cited market integrity and prudential requirements as factors that jurisdictions should consider when developing regulatory requirements for the space.”
Gibraltar, which has a population of approximately 34,000 people, has emerged as an attractive location for cryptocurrency in recent years. Huobi reportedly relocated its spot trading operations to its Gibraltar-based affiliate following approval from the GFSC.
