ThisOn the southern coast of the Mediterranean Sea, it sits in the shadow of steep rocky limestone cliffs and entwined wild olive trees. Gibraltar The Stock Exchange (GSX) is quietly preparing for corporate acquisitions that may have a global impact on the former naval garrison.
Less than half a mile away, next to the blue waters of Gibraltar’s China Port Terminal, the peninsula regulator is reviewing a proposal that will prompt the blockchain company Valereum to acquire the exchange in the new year-which means the British Overseas Territory The world’s first comprehensive exchange will soon be held, and traditional bonds can be traded with major cryptocurrencies such as Bitcoin and Dogecoin.
This is a bold move for a territory with only 33,000 people, in which the financial sector-which accounts for approximately one-third of Gibraltar’s £2.4 billion economy-is overseen by a supervisory authority composed of 82 employeesIf everything goes according to plan, the enclave may become a global cryptocurrency center; if the control set by the small team of the regulatory agency fails, it may damage its reputation and eventually may threaten its economic diplomatic sanctions.
Although countries including China and the United Kingdom have banned or publicly warned against investing in crypto assets, Gibraltar has bucked the trend and promised to formally regulate cryptocurrencies in order to ensure that the territory’s status as a financial center is guaranteed in the future.
Just as Gibraltar is struggling to get rid of its reputation as a global tax haven, the government has sued a company Spanish newspapers Attempt to restore its global status.
Gibraltar Minister of Digital, Financial Services and Public Utilities Albert Isola (Albert Isola) said that although Gibraltar was a tax haven 20 years ago, the region has now completely reformed its taxation and information sharing policies. He said that the introduction of encryption regulation has had a similar effect: eradicating bad actors and providing guarantees for investors.
Isola said: “If you want to do some naughty things in cryptocurrency, you won’t be in Gibraltar, because these companies are licensed and regulated, and they are not available anywhere else in the world.”
So far, the Gibraltar regulator has approved the licensing plans of 14 cryptocurrency and blockchain companies, attracting the attention of former Sirius Mining Chairman Richard Bolden, who chose Gibraltar for Valereum’s cryptocurrency trading project. He said that Valereum is trying to capitalize on the cryptocurrency industry worth about 3.5 trillion U.S. dollars (2.6 trillion pounds)-roughly the total value of all companies listed on the London Stock Exchange.
Poulden is the chairman of Valereum, a company headquartered in Gibraltar that focuses on providing technologies that connect mainstream traditional currencies such as the British pound and the U.S. dollar with crypto assets.
Overhauling an exchange that currently has only three employees will be a major task and will require changes to Gibraltar’s regulations to govern how cryptocurrencies are traded on GSX. But Poulden said his company relies on technology rather than people to weed out any bad actors.
He said that anti-money laundering checks on cryptocurrencies “are not very different from checks on any other source of currency. In fact, in some cases, because you can trace the blockchain and see exactly the money It’s actually much easier than trying to find the source of a large amount of money in the bank.”
Other countries will pay close attention.Neil Williams, London Reeds Solicitors Deputy Director of Complex Crimes said: “If it succeeds, you will definitely think that other jurisdictions will follow suit, because it is an increasingly valuable commodity.”
However, experts warn that if Gibraltar’s regulators finally provide legal approval to crypto companies, even if it is inadvertently, Gibraltar may face sanctions from countries such as the United States. Money launderer, Black market criminals or thieves who like the anonymity of encrypted assets.
Major financial regulators around the world expressed concern about this, including Bank of England, Regarding the rapid development of encrypted assets and the potential consequences for consumer and investor protection, market integrity, money laundering, and terrorist organization financing.
“It can facilitate or promote money laundering, sanctions evasion, terrorist financing, so everyone is cautious about it,” said Charlie Steele, a partner of a forensic accounting firm and consulting firm Forensic Risk Alliance and a former U.S. Department of Justice official. .
“Regulators all over the world, almost all of them, treat it with deep skepticism… Therefore, the idea of a country welcoming them to buy stock exchanges is a bit beyond this idea.”
One month before Valereum announced its bid for GSX in October, the Chairman of the US Securities and Exchange Commission Gary Gensler announced that as an asset class, cryptocurrency is “More like the wild west…In some applications, frauds, scams and abuses are flooded”, further raising concerns that criminal funds may infiltrate the mainstream financial system.
Relaxed anti-money laundering (AML) controls have resulted in the following jurisdictions: Malta Due to the lack of basic financial protection, it has been greylisted by the World Money Laundering and Terrorist Financing Regulatory Agency (FATF). This may severely damage Malta’s economy and issue a severe warning to other countries and regions that may be laissez-faire in regulation.
At the same time, Singapore had to turn around to approve Bitget, an independent cryptocurrency exchange.it Suspend the exchange Earlier this month, he used the unauthorized image of the K-pop band BTS to maximize its profits by promoting a digital currency involving brand disputes.
“If it seems at first that everyone is running to Gibraltar to escape the real regulators, it won’t go well for them,” Steele warned.
If anti-money laundering or sanctions rules are broken or circumvented, “they can do a lot and play a leading role internationally through the FATF to make things in Gibraltar difficult. You will see that the FATF can implement various measures, which will require Its members restrict business with that country,” he added.
But Gibraltar insists that it welcomes cryptocurrency companies with wide eyes, and has consulted for four years before launching regulation of the industry in 2018, helping it gain a reputation as a “blockchain rock”. Isola said that through filtering and licensing companies, they can weed out bad actors.
“I don’t understand how the risks in Gibraltar will increase, when you can go to any other European country today and operate exactly the same business without supervision, license and supervision. So how can we increase exposure by supervising them? It’s the complete opposite,” Isola said.
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He emphasized that the country’s regulators only approved applications from 14 companies in three years, and he claimed that this number illustrates the rigor of the licensing program. “This is not a gold rush,” he said.
“When it comes to blockchain-based innovation, the knee-jerk reaction of any commentator-especially when it involves a small jurisdiction like Gibraltar-is’Gosh, risks, alerts and all other things,’ Said Tom Kittinger, director of the RUSI Financial Crime and Security Research Center. “I do think that the ability to understand jurisdictions before lashing out is very important. I say this because of all the small jurisdictions on the planet, it is Gibraltar that has invested the most time and energy to understand the opportunities that blockchain brings. .”
The Gibraltar Financial Services Commission declined to comment on the Valereum transaction.
