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Since 1st January 2018, the Financial Services (Distributed Ledger Technology Providers) Regulations 20171 (the “DLT Regulations”) enable businesses using Distributed Ledger Technology (“DLT”) to be regulated.

Token Sales (ICOs) are not currently regulated except that they are already required to have systems in place to prevent, detect and disclose financial crime risks such as money laundering and terrorist financing. It is expected that Token Sales will be regulated in Gibraltar by the end of Q2, 2018.

Ellul & Co. Fintech Expertise

We have expertise in the Gibraltar fintech sector advising on all aspects of the set-up of:

  • Regulated Cryptocurrency Exchanges.
  • Any regulated business using DLT to store or transfer value belonging to others.
  • Token Sales (ICOs).
  • Digital Asset Investment Funds.

We build our service around each client. With specialist knowledge in a range of disciplines, we recognise the legal and commercial challenges faced by businesses in this sector. Our experienced team of lawyers and professionals are experts in their fields, approachable and are happy to assist. Please click on Profiles - Ellul & Co. & Fintech Team to view the profiles of our law firm and of our fintech team.

We represent several cryptocurrency exchanges, which are applying for Gibraltar licences) and token sale companies. Notable clients include the ProximaX token sale conducted by a founder of the NEM Foundation that oversees the development of the NEM blockchain technology.

The DLT Regulations

Our regulator, the Gibraltar Financial Services Commission (“GFSC”), licenses and oversees DLT businesses which:

“Carry on by way of business, in or from Gibraltar, the use of distributed ledger technology for storing or transmitting value belonging to others.”

The DLT regulations were devised by the GFSC which has recognised that the framework must be responsive to new use cases of DLT and needs to be flexible enough to adapt to this rapidly changing technology. Gibraltar’s answer to this ever-changing landscape was to devise a framework based on nine key regulatory principles.

The Nine DLT Regulatory Principles

Gibraltar-regulated DLT businesses must:

  1. Conduct their business with honesty and integrity.
  2. Pay due regard to the interests and needs of each and all its customers and communicate with them in a way that is fair, clear and not misleading.
  3. Maintain adequate financial and non-financial resources.
  4. Manage and control their business effectively, and conduct their business with due skill, care and diligence; including having proper regard to risks to its business and customers.
  5. Have effective arrangements in place for the protection of customer assets and money when they are responsible for them.
  6. Have effective corporate governance arrangements.
  7. Ensure that all of their systems and security access protocols are maintained to appropriate high standards.
  8. Have systems in place to prevent, detect and disclose financial crime risks such as money laundering and terrorist financing.
  9. Be resilient and have contingency arrangements for the orderly and solvent wind down of its business.

More detail on the above principles and the expectations of the GFSC are set out in the DLT Guidance Notes issued by them which can be viewed at: www.gfsc.gi/dlt.

Gibraltar-regulated DLT firms will benefit from the certainty that they are operating within the law. Consumers can have faith in the integrity of their owners and managers and in their ability to operate the business. This increases consumer confidence in them and in the appeal of their products and services.

Cryptocurrency Exchanges

We represent several cryptocurrency exchanges having taken them through the Gibraltar regulatory process. See our downloadable information brochure on Setting Up a Gibraltar Cryptocurrency Exchange for more detailed information.

The main points to consider are:

  • An application to the GFSC for a DLT Provider Licence must be made. This is a financial services licence where applicants must demonstrate how their business will comply with the Nine DLT Regulatory Principles. The GFSC are committed to dealing with the whole process in three months.
  • A comprehensive business plan will be required as well as a range of policy documents setting out proposed compliance with the Nine DLT Regulatory Principles.
  • It is expected that “mind and management” will reside in Gibraltar. Senior personnel must, therefore, be located in Gibraltar and all key strategic decisions must be made here. This is of fundamental importance. The principal role-holders will be expected to work in Gibraltar including the CEO, CFO and CTO.
  • A Gibraltar crypto exchange is legally permitted to hold customer fiat wallets and change crypto to fiat and vice versa. We have conducted the legal analysis on this and, provided a particular structure is put in place, fiat wallets are permitted without a separate licence.

We have the experience of having assisted clients with several of these applications and are able to guide our clients through the whole regulatory process. For more information see Setting Up a Gibraltar Cryptocurrency Exchange.

Other DLT Businesses

Although crypto exchanges are the ones making the most use of the Gibraltar DLT Provider licence, they are not the only type of business which can be regulated. Any businesses may be licensed which: “carry on by way of business, in or from Gibraltar, the use of distributed ledger technology for storing or transmitting value belonging to others.” This includes:

  • Cryptocurrency exchanges.
  • OTC trading platforms.
  • Crypto custodians and escrow service providers.
  • Centralised crypto scheme administrators (for example, loyalty points and in-game currencies).
  • B2B payment network operators.
  • Any company holding crypto or other digital assets, as a business, on behalf of others.

For more information see our downloadable information brochure on Locating Your DLT Business in Gibraltar. This contains an overview of the key benefits, the law, the licensing fees and process and a brief cost benefit analysis.

Token Sales - Initial Coin Offerings (ICOs)


Our law firm specialises in this area of work and assists our clients in launching Gibraltar law compliant token sales. We advise them to self-regulate and adopt best practice so that they are ready for when the forthcoming token sale regulations are enacted.


Token sales are currently unregulated in Gibraltar. However, on 14th March 2018, the Gibraltar Government published proposals for the regulation of token sales2. It is expected these will become law by the end of Q2, 2018.

Token Sales (ICO) companies are already required to have systems in place to prevent, detect and disclose financial crime risks such as money laundering and terrorist financing. The Proceeds of Crime Act was amended on 16th March 2018 to require entities which receive proceeds (in any form) from the sale of tokenised digital assets, to conduct due diligence on its customers and on the source of such proceeds.

The exact content of the proposed laws are not yet known but certain aspects are already clear.

  • There will be certain disclosures which should be contained in whitepapers. These will be akin to the investment warnings and disclosure of risks contained in the prospectuses of collective investment schemes. The law will specify some disclosures and the detail will be expanded on by means of guidance notes to be issued by the GFSC. It is expected that these provisions will take effect immediately on the new token regulations coming into force.
  • There will be a system of local Gibraltar authorised sponsors or nominated advisers (“Sponsor”). For ICOs raising more than EUR 500,000 a Sponsor must be appointed. These will be firms such as our which must be licensed by the GFSC.
  • It is expected that there will be a transitional period of two months after new token regulations come into force. Any ongoing token sales completed during this time will not require a Sponsor.
  • The Sponsor’s obligations will be to ensure that the ICO complies with the disclosure rules and that it has proper anti-financial crime systems in place. In practice it will be much more than that and a Sponsor will be staking its reputation by backing an ICO project.

Conducting a Gibraltar Token Sale (ICO)

We advise on all of the Gibraltar aspects of conducting a token sale. Our work will include:

  • A review of the whitepaper, writing the legal and regulatory parts such as the required disclosures, the risk factors and corporate governance sections.
  • A legal opinion setting out the regulatory position in respect of token sales, including on whether the token is a security under Gibraltar law. Only utility tokens can raise funding via a token sale.
  • High-level Gibraltar tax advice which will be included in the legal opinion.
  • A separate legal opinion for any bank where the ICO Company wishes to open an account.
  • The drawing up of various policies and procedures which will be needed for the token sale to be Gibraltar-law compliant including: anti-financial crime, customer due diligence, corporate governance, risk management, business continuity and data protection.
  • The drawing up of policies on the protection of digital assets and on ICT and cybersecurity. We work with a specialist consultancy firm in Gibraltar which we will engage to draw these up.
  • Gibraltar-law compliant Terms and Conditions for the token sale, and Terms of Use, Privacy Policy and Cookie Policy for the token sale website. We will also draw up an agreement for any pre-sale of tokens and a template adviser/consultant agreement should these be required.
  • Assistance with opening of a bank account in Gibraltar.
  • Assistance with engaging accountants and auditors.

For more detailed information see our downloadable brochure on Gibraltar Token Sales – Initial Coin Offerings (ICOs).

Digital Asset Investment Funds

We advise on the set up of collective investment schemes investing in cryptocurrencies. These are mainly set up as Experienced Investor Funds (“EIFs”).

EIFs are designed for sophisticated investors. To qualify, investors must contribute a minimum investment of EUR 100,000. A lesser investment of EUR 50,000 can be accepted provided that an investor has received investment advice from a regulated professional.

The Financial Services (Experienced Investor Funds) Regulations 2012 (the “EIF Regulations”) allows and regulates EIFs. The EIF Regulations are, in effect, a self-contained piece of secondary legislation dedicated to EIFs which establishes a streamlined process for authorising and establishing open-ended or closed-ended funds where the investor is an experienced investor based on a system of self-certification by the investor, the EIF’s fund administrator and its lawyers.

EIFs may be used to invest in cryptocurrencies and in other digital assets. For more information please visit our Experienced Investor Funds page.