A new era in the vast, modernising world has begun and it’s called FinTech. FinTech refers to the new wave of financial technology which is allowing for new and innovative ideas which could change the world as we know it. The key to enabling this new machinery is the Distributed Ledger Technology (DLT), an innovative technology which forms the basis for cryptocurrencies such as Bitcoin. Comparisons with the advent of the steam engine and the internet in terms of game-changing qualities are commonplace when talking about this disruptive digital revolution.
What are the current challenges?
Currently, the growing number of tech companies around the world which are raising funds by issuing their own digital currencies are doing so in an unregulated market. The US Securities and Exchange Commission has warned investors against fake initial coin offerings (ICOs) and “pump and dump” scams. This has created a worry that ICOs are giving an opportunity to fraudsters to create investment bubbles which could easily collapse.
The digital currencies are traded and stored using DLT or blockchain technology.
What is Gibraltar offering?
The Government of Gibraltar has recognised the potential of the new technology and has taken steps to make its prospects better and safer. Since 1 January 2018 the Government of Gibraltar has introduced a DLT regulatory framework which sets out nine regulatory principles that enable a flexible, adaptive approach in the creation and use of new technology. Licence application fees are between £10,000 and £30,000 depending on the complexity of applicant’s business.
These principles include obligations to conduct its business with honesty and integrity, have effective arrangements in place for the protection of customer assets and to prevent financial crime risks such as money-laundering and terrorist financing.
The government is also looking to build on the current legislation for blockchain/DLT exchanges to introduce new regulations for ICOs or initial token sales (ITS). This is due to be established very soon.
Gibraltar has been proven to be an international financial centre for business start-ups and in particular was very successful in setting up a regulated environment for the online gaming industry on a centre of excellence.
Gibraltar’s corporate tax rate stands at 10% on income that accrues and derives in Gibraltar. There is also no capital gains tax, VAT nor withholding tax on dividend distributions made by Gibraltar companies to other companies and to persons not ordinarily resident in Gibraltar. It also does not tax bank interest or investment income.
How can we assist?
RSM Gibraltar is well placed to provide assistance in a wide range of services in the crypto/ICO space. Our FinTech team offer a wide range of expertise to provide services from an advisory, accounting, audit and tax perspective. Furthermore, RSM have a dedicated Fiduciary department ready to assist in the setup of SPVs.