Answer ... As part of the financial services legislative reform programme, on 15 January 2020 Gibraltar’s new Financial Services Act (the “FS Act”) and accompanying, sector-specific regulations, targeting industries such as Funds, E-Money, Distributed Ledger Technology Providers and Banking (the “FS Regulations”) came into effect.

This new legislative structure consolidated Gibraltar’s financial services landscape, providing a clear, more navigable and accessible legislative framework for financial services whilst encompassing all relevant EU legislation transpositions and local legislative initiatives to date.

Although the substance on which the FS Regulations derive has not been materially changed from the regime in place previously, some changes have been made to align their content with: the terminology of the FS Act; and the new concepts and policy introduced by the FS Act (which were consulted on and presented to industry in June 2019).

Answer ... The abovementioned domestic and EU legacy frameworks (e.g., the EU Market in Financial Instruments Directive and the Payment Services Directive) serve as the principal legislative regimes underpinning fintech in Gibraltar. However, with the enactment of the Financial Services (Distributed Ledger Technology Providers) Regulations, Gibraltar has distinguished itself from other jurisdictions globally at the forefront of fintech by establishing a principles-based legislative framework that brings into regulatory scope any firm carrying out by way of business, in or from Gibraltar, the use of distributed ledger technology for storing or transmitting value belonging to others.

Answer ... The Financial Services Commission (“FSC”) in Gibraltar is the primary competent authority, whose mandate is to regulate the financial services industry by ensuring the promotion of good business, consumer protection and enhancement of Gibraltar’s reputation as a quality financial services centre. The FSC’s main role and regulatory powers encompass the authorisation, supervision and enforcement of regulated entities under the abovementioned legislative frameworks.

The above applies, save for the business of money lending, which is licensed and falls under the regulatory remit of the government of Gibraltar.

Answer ... The FSC operates a risk-based approach, underpinned by a Risk Governance Framework (RGF), to innovative offerings and businesses within the Gibraltar finance industry. The RGF prescribes a set of processes, policies, standards and disciplines that safeguard a consistent understanding of risk, as well as the adequate resource allocation in those areas which are outside the FSC’s risk appetite and tolerance. This approach ensures a focus on how best to support the safe growth of the jurisdiction while not stifling innovation within the industry.

Answer ... Key industry associations such as the Gibraltar Association of Compliance Officers, the Gibraltar Electronic Money Association, the Gibraltar Bankers Association and the newly formed Gibraltar Association for New Technologies operate as formal lines of communication between policy makers and the private sector in Gibraltar’s fintech industry, facilitating the exchange of information and ideas, with a view to enhancing knowledge and awareness within the industry. Further industry organisations have similarly embraced fintech offerings – an example is the Gibraltar Funds and Investments Association’s publication of a Code of Conduct for Crypto Funds in October 2018.