Token Sales Treated as Securities Offerings by Default in Gibraltar

In an exclusive interview with Cointelegraph, Gibraltar’s minister for digital and financial services, Albert Isola, has welcomed firms wishing to launch security tokens to the jurisdiction.

The minister revealed that the British Overseas Territory assumes that all token offerings are securities issuances by default, placing the responsibility on the issuer to be able to demonstrate otherwise.

Minister Isola also revealed that the government will soon mandate that the employees of all financial firms in the jurisdiction attend a university course on anti-money laundering, or AML, risks.

Gibraltar welcomes security tokens

Minister Isola stated that Gibraltar welcomes firms seeking to conduct issue security tokens, provided that they adhere to the territory’s strict compliance regimes.

“There is no issue with somebody who wants to come and issue a security token here, the legislation is there to apply” he said.

In its most recent guidance, Gibraltar announced it would assume that all tokensales comprise the issuance of securities, placing the onus on issuers to demonstrate that their tokens are not securities:

“Our last position was that we would assume that every token was a security token unless you could demonstrate that it was a utility token. So instead of giving the benefit of the doubt to the utility token, we say ‘if you are a token sale, we are going to assume you are a security unless you can unless you can demonstrate that you're not.’”

The minister added that Gibraltar’s government is “keeping a very close eye on that as to whether we introduce separate frameworks for token sales with an avenue for utility and a separate avenue for security.”

Small jurisdictions can’t afford to make mistakes

The minister revealed that Gibraltar’s university recently launched detailed courses on anti-money laundering law and procedures that the government will soon mandate the employees of financial firms attend.

The policy will be introduced alongside similar measures requiring the employees of betting firms attend courses on how to identify problem gamblers.

“Consumer protection, quality and reputation are things that are at the forefront of everything that we do. Why? Because we're a very small jurisdiction. We can't afford to go wrong,” said Minister Isola.

“If you're a big country, the U.K., if you make some mistakes it doesn't really matter. But in our position, we can't afford to set ourselves the luxury of adopting that philosophy. So we're far more careful. And it has served us well.”

Gibraltar is also introducing a new regulatory principle for the blockchain sector aimed at addressing market manipulation risks.