Comparative Guides

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4. Results: Answers
How are the following key activities in the fintech space regulated and what specific legal issues are associated with each? (a) Crowdfunding, peer-to-peer lending; (b) Online lending and other forms of alternative finance; (c) Payment services (including marketplaces that route payments from customers to suppliers (eg, Uber and AirBnb); (d) Forex; (e) Trading; (f) Investment and asset management; (g) Risk management; (h) Roboadvice; and (i) Insurtech.

Answer ... (a) Crowdfunding, peer-to-peer lending

Currently, no legislation or regulation specifically relates to crowdfunding in Gibraltar. However, the Financial Services Commission (FSC) has expressed that it is monitoring developments in the crowdfunding market. In March 2019 the European Parliament approved the European Commission’s proposals for common rules for crowdfunding platforms across Europe, with the crowdfunding regulation forming part of the European Commission’s FinTech Action Plan.

Any crowdfunding platforms should be wary of the newly implemented EU Prospectus Regulation (2017/1129), the domestic Prospectuses Act 2005 and the funds regime, as certain platforms may be conducting regulated activity under these frameworks. Similarly, peer-to-peer platforms which have gained popularity in recent times should consider whether their activity falls under ‘money lending’ in accordance with Financial Services (Moneylending) Act 1917.

(b) Online lending and other forms of alternative finance

See questions 4(a) and 2.4 (notably coin offerings or security token sales).

(c) Payment services (including marketplaces that route payments from customers to suppliers (eg, Uber and AirBnb)

The Payment Services Directive (2015/2366), which is transposed into Gibraltar law via the Financial Services (Payment Services) Regulations 2018, governs payments services activities in or from Gibraltar.

(d) Forex

Activities which may involve foreign exchange could require a licence under the Financial Services (Investment and Fiduciary Services) Act 1989 as a bureau de change.

(e) Trading

This will often depend on the product and/or activity. The trading of financial instruments will fall under the Markets in Financial Instruments Directive, while the trading of virtual assets will fall under the Distributed Ledger Technology Regulations.

(f) Investment and asset management

Gibraltar’s investment and asset management fintech sectors are primarily governed through the EU Alternative Investment Fund Managers Directive and undertakings for collective investment in transferable securities legislative regimes, with Gibraltar’s Financial Services (Experienced Investor Funds) Regulations 2018 providing a further route for innovate fund products.

(g) Risk management

There are no specific regulatory frameworks governing risk management in Gibraltar. However, the FSC sets out prescriptively in guidance notes and reports the standards and requirements of licensed entities.

(h) Roboadvice

There are no specific regulatory frameworks governing roboadvice in Gibraltar.

(i) Insurtech

Traditional insurance firms in Gibraltar are becoming increasingly receptive to the idea of insuring fintech businesses, particularly in respect of those business seeking authorisation from the FSC.

However, although supportive of the industry, insurers in Gibraltar are not currently actively endorsing the adoption and integration of fintech into their businesses.

For more information about this answer please contact: Anthony Provasoli from Hassans