“AI will become sentient around the same time that conference room A.V. works flawlessly every time” - Jeff Garzik

Recent developments in the area of Fintech & DLT Gibraltar’s future in DLT/blockchain Siân Jones

The future's bright, the future's Orange Created by WRCS for Orange Personal Communications Services Ltd 07 December 2018

2015: Cryptocurrency working group 2 reports 2016: GFSC charged with developing regulations Q4 2016: Expanded to distributed ledger technology Q2 2017: Consultation paper published October 2017: DLT Regulations became law 1 January 2018: DLT Regulations came into force History of DLT in Gibraltar 07 December 2018

Pioneering method for regulating businesses that use a nascent, evolving technology 07 December 2018

NOT soft or light-touch regulation Just as robust Purpose-designed Outcomes-focused Principles-based NOT soft or light-touch regulation Just as robust Regulated to same standard as other financial services businesses Appropriate, proportionate & relevant New type of financial services regulation Applied on a case-by-case basis 07 December 2018

Carrying on by way of business, in or from Gibraltar, the use of distributed ledger technology for storing or transmitting value belonging to others 07 December 2018

Outcomes Protect consumers Protect Gibraltar’s reputation Good for Gibraltar’s economy 07 December 2018

Nine principles Honesty & integrity Fairness Resources Systems & controls Protection of customer assets Corporate governance Systems & security Financial crime Orderly & solvent wind-down THE REGULATORY PRINCIPLES 1. A DLT Provider must conduct its business with honesty and integrity. 2. A DLT Provider must pay due regard to the interests and needs of each and all its customers and must communicate with them in a way that is fair, clear and not misleading. 3. A DLT Provider must maintain adequate financial and non-financial resources. 4. A DLT Provider must manage and control its business effectively, and conduct its business with due skill, care and diligence; including having proper regard to risks to its business and customers. 5. A DLT Provider must have effective arrangements in place for the protection of customer assets and money when it is responsible for them. 6. A DLT Provider must have effective corporate governance arrangements. 7. A DLT Provider must ensure that all of its systems and security access protocols are maintained to appropriate high standards. 8. A DLT Provider must have systems in place to prevent, detect and disclose financial crime risks such as money laundering and terrorist financing. 9. A DLT Provider must be resilient and have contingency arrangements for the orderly and solvent wind down of its business. 07 December 2018

Broad range of use cases & business models ∼30 applicants Broad range of use cases & business models ∼50% currently having applications assessed Expecting to grant first licences: Summer 2018 07 December 2018

I C O Initial Coin Offering 07 December 2018

Offering of tokenised digital assets to the public Public token offering Means of raising finance Typically by early-stage startups Without issuing securities Now being using for later-stage financing … and by established enterprises Largest ICO to date raised $4bn 07 December 2018

September 2017: Public statement December 2017: Discussion paper Use of PTOs exploded in 2017 September 2017: Public statement December 2017: Discussion paper February 2018: Press release March 2018: Policy document March 2018: Added to Proceeds of Crime Act Q2 2018: Expected legislation 07 December 2018

Token regulations Complement DLT Regulations Primary market promotion, sale & distribution Secondary market conduct Investment & ancillary services 07 December 2018

The future's bright, the future’s DLT 07 December 2018

The future's bright, the future’s red and white 07 December 2018