“Today’s announcement of co‑ordinated international action on cryptoassets is a major step forward, marking another important milestone towards the widespread and co-ordinated approach to combat tax evasion through greater transparency and exchange of information,” Secretary-General Cormann said.

“We strongly welcome the extensive support being shown for quick action to make the international exchange of information collected under the OECD standard on cryptoasset reporting a reality. The international community can count on the OECD and the Global Forum on Transparency and Exchange of Information for Tax Purposes to ensure that the tax transparency architecture remains both up-to-date and effective going forward.”

The Crypto-Asset Reporting Framework (CARF) is a key component of the International Standards for Automatic Exchange of Information in Tax Matters developed by the OECD under a G20 mandate. It provides for the automatic exchange of tax-relevant information on cryptoassets and comes against the backdrop of a rapid adoption of the use of cryptoassets for a wide range of investment and financial uses.

Since January 2018, organisations that use DLT to store or transmit value belonging to others, in or from Gibraltar, need to be authorised by the GFSC as a DLT Provider, subject to the transitional arrangements.

An “in-principle” decision is the first stage of full authorisation where an applicant needs to satisfy the GFSC on one or more requirements in order to obtain a licence.

This means that firms in Gibraltar that use digital ledger technology (DLT) to store or transmit value belonging to others now have to apply for a licence from the GFSC.

The new framework hinges on nine principles designed for blockchain applications that companies must adhere to, namely: honesty and integrity; customer care; adequate resources; effective risk management; protection of client assets; effective corporate governance; systems and security access; financial crime prevention; and resilience. 

The authorisation process for DLT businesses is in three phases and the GFSC has indicated that it should take three months to assess an application. 

The first stage is a pre-application engagement to discuss the business model and type of activity and/or services the firm wishes to provide in or from Gibraltar. 

The second phase is an initial application assessment during which the GFSC will assess, within two weeks, the inherent risk and complexity of the proposed business and provide feedback ahead of the final stage. 

A non-refundable fee of £2,000 has to be paid at this point, with full application fees being payable later and the amount of the subsequent annual fee varying according to the complexity and category assigned to the DLT provider. 

The applicant will then be invited to deliver a presentation to the GFSC and, once a licence has been granted, an onsite visit will be completed. 

The GFSC has also introduced transitional arrangements for firms that were already carrying on DLT activities in Gibraltar before the new regulatory framework came into force. 

These firms have to apply to the GFSC by 31 March 2018 and can continue to operate while the GFSC is reviewing their application. 

Nicky Gomez, Head of Risk and Innovation at the GFSC, said: “[We] expect to be very busy in the coming months, and are looking forward to working on some interesting and innovative ideas with applicants. 

"Working closely and collaboratively with the financial services industry and the Government of Gibraltar has resulted in the GFSC becoming the first regulator to introduce a DLT Regulatory Framework – it is a very encouraging time and we are also looking forward to the challenge!”

The Parliament of Gibraltar passed a bill for an Act to amend the Financial Services (Investment and Fiduciary Services) Act in order "to extend measures for the protection of investors to the customers of licensees carrying on controlled activities which are not investment services". 

This bill represents a legal tweak to pave the way for new rules that should come into force on 1 January 2018 and that aim to define blockchain's use in storing and transmitting value under the territory's law. 

“Gibraltar is one of the first jurisdictions in the world to introduce a regulatory framework for distributed ledger technology businesses thereby providing the regulatory certainty required by quality firms that we aim to attract to Gibraltar,” Minister of Commerce Albert Isola said. 

“I am aware that there are a number of businesses waiting to file their applications with the Gibraltar Financial Services Commission on 1 January 2018 and this is excellent news."

The Government said that the publication of this bill and regulations is a key milestone in a journey that commenced in 2014 with the creation of the Cryptocurrency Working Group, a private sector initiative, ably driven by Paul Astengo of Gibraltar Finance, David Parody and Joey Garcia.

Extensive work and research with leading industry experts then led to three public consultations on the subject and Gibraltar is now on track to provide regulatory certainty in this field in January 2018, as promised earlier this year. The legislation has been designed to provide an efficient, safe and innovative regulatory framework for firms engaging in activities not otherwise subject to regulation and that use DLT for the transmission or storage of value belonging to others (DLT framework).

The new rules are planned to come into effect in January 2018 and will cover any commercial use of distributed ledger technology (DLT) as a means to store and transmit value.

The new rules are planned to come into effect in January 2018 and will cover any commercial use of DLT as a means to store and transmit value. 

While this would include cryptocurrency exchanges, the word "value" is also defined as including "assets, holdings, or other forms of ownership, rights of interest". 

Investment services (and other controlled financial offerings) connected to the technology would be covered as well. 

Under the framework, DLT services providers will be granted a working licence, providing they conform to some regulatory principles. 

These principles include honesty, integrity, the protection of customer assets and maintaining a high degree of cyber security. 

Once the rulings are accepted by Gibraltar's legislature, the British Overseas Territory will be among the few jurisdictions worldwide to offer a fully regulated framework for firms working with blockchain.