Gibraltar has enacted new regulations for virtual assets and distributed ledger technology (DLT) service providers in a bid to face market manipulation and insider trading threats.
Gibraltar’s government issued the 10th Regulatory Principle of the country’s financial services regulation on April 27. The information is contained in a Guidance Note issued by the Gibraltar Financial Services Commission (GFSC), the territory’s principal financial regulator.
The rule, which was drafted by a special working group that includes government officials and business professionals, establishes operational standards for combating market manipulation.
DLT providers are expected to keep an eye on the movement of large virtual asset holdings, the publication of information that could be used to generate false or misleading market signals, and the use of algorithmic-based systems to provide deceptive data about transaction volumes.
The rule also compels crypto businesses to look for and prevent insider trading, as well as to share any relevant information with the public “as soon as practicable.”
The proposed trading guidelines also include measures to limit the ability of liquidity providers and market makers to dramatically change asset prices.
Gibraltar’s Minister for Digital and Financial Services, Albert Isola, expressed optimism that the new measures will assist the territory maintain its existing strong ties to the cryptocurrency industry. Isola went on to say:
“The introduction of the 10th Principle, with a significant input from industry, will develop further our regulatory framework. It provides permissioned firms with clear guidance on the standards that are required of them as well as providing consumer and jurisdictional protection.”
Fintech lawyer Joey Garcia, one of the working group’s heads, praised 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 over 34,000 people, has become a popular crypto destination in recent years. Huobi had apparently shifted its spot trading operations to its Gibraltar-based affiliate after receiving authorisation from the GFSC.
