Gibraltar sets high regulatory bar for fintech sector - Isola
In pursuing business in the fledgling fintech sector, Gibraltar will apply the same philosophy that has allowed it to develop into one of the world's main hubs for online gaming: a focus on quality operators and strong regulation.
That was the key message delivered by Finance Minister Albert Isola at a breakfast briefing in the Royal Automobile Club, where he set out Gibraltar's aspirations to develop this new area of business.
It comes at a time when one segment of this business - the ephemeral world of cryptocurrencies - has received bad press amid fears it could be abused by unscrupulous operators.
Gibraltar's focus, however, is not on cryptocurrencies, but on the distributed ledger technology that underpins them. This technology is seen as transformational and has potential for wider application in the financial services industry.
By January, the Rock aims to have legislation in place to regulate businesses using distributed ledger technology, opening new opportunities that could generate ample business in the long-term.
"We believe fintech can be a good thing, but it has to be regulated," Mr Isola said.
"But if you can regulate it effectively, then there is no reason why it should not be another stream of long-term, sustainable good quality business."
"It's going to be a robust regulatory regime which will seek out the quality operators and turn back those that are not," he said, adding: "The bar will be high."
To illustrate his point, Mr Isola compared Gibraltar's approach to fintech to its handling of gaming business over the past 23 years.
In all of that time, he said, not a single Gibraltar-based gaming company had gone under.
That philosophy of focusing on quality and regulation would now be transposed into the fintech sector.
"As we did with gaming, we will welcome good, quality fintech business to Gibraltar, to come and be regulated, because what firms today in this space most seek is regulatory certainty," he said.
"Those that want to be outside the regulatory net, we don't want."
"Those that want to be within the regulatory framework are the ones that we will seek to find.”
Nicky Gomez, the head of risk and innovation at the Gibraltar Financial Services Commission, said Gibraltar’s new regulatory framework for blockchain technology was “transformational, innovative and pioneering”.
He said it had been designed to be “flexible and responsive” to an area of business that was still in its development stage.
The framework was based on core principles and focused on nine regulatory outcomes that mirrored applicable core rules in other areas of financial services.
In broad terms, it will ensure a clear focus on customer protection and risk management, alongside compliance with rules on security, counter-terrorism and anti-money laundering.
“The outcome is a purpose-built legal and regulatory framework which recognises distributed ledger technology as a predominantly transformational technology, provides regulatory certainty for any form wanting to operate within this space and in and from Gibraltar, enhances consumer confidence, and shows that Gibraltar continues to be seen as a well-regulated and safe place from which to do business,” he said.
The breakfast also heard from Jay Gomez, a lawyer with Triay & Triay and a member of the executive of the Gibraltar Funds and Investment Association.
He outlined the many products on offer in Gibraltar as well as other key selling points including regulatory, fiscal and lifestyle incentives, alongside accessibility and speed to market.