Gibraltar rolls out new virtual asset regulation to combat market abuse

The document will require crypto companies to seek and prevent insider trading and market manipulation.

The British overseas territory of Gibraltar introduced a new regulatory package for distributed ledger technology (DLT) service providers. The document elaborates on the responsibilities of crypto businesses in regards to threats of market manipulation and insider trading. 

On April 27, the government of Gibraltar published the 10th Regulatory Principle of the country’s financial services regulation. The details are revealed in a Guidance Note, provided by the Gibraltar Financial Services Commission (GFSC), the chief finance regulator of the territory.

The regulation, crafted by a special working group that included both government officials and  industry experts, sets operational guidelines for preventing market abuse. DLT providers are expected to monitor the movement of significant virtual asset holdings, publication of information that could be aimed at generating false or misleading market signals, and to investigate whether algorithmic-based systems are being used to generate deceptive data around transaction volumes.

The regulation also requires crypto companies to seek and prevent any insider trading activities and to inform the public of any relevant information “as soon as possible.” Proposed trading standards also include putting in place measures to reduce the liquidity providers and market makers’ capacity to significantly alter asset prices.

Albert Isola, Gibraltar’s Minister for Digital and Financial Services, expressed his confidence that the introduced measures will help the jurisdiction maintain its already strong relationship with the crypto sector. Isola commented to Cointelegraph:

“The introduction of the 10th Principle, with a significant input from industry, will develop further our regulatory framework. It provides permissioned firms with clear guidance on the standards that are required of them as well as providing consumer and jurisdictional protection.”

One of the leaders of the working group, fintech lawyer Joey Garcia, commended Gibraltar’s push to comply with FATF recommendations:

“It is great to see […] Gibraltar lead in setting standards, particularly when the FATF has cited market integrity and prudential requirements as factors that jurisdictions should consider when developing regulatory requirements for the space.”

A home to the population of roughly 34,000 people, Gibraltar emerged as an attractive location for crypto in recent years. ​​Following approval from the GFSC, crypto exchange Huobi had reportedly moved its spot trading operations to its Gibraltar-based affiliate.