Could Gibraltar Blockchain Exchange Be Europe's First Regulated ICO Platform?

The Gibraltar Blockchain Exchange (GBX) aims to be a world-leading institutional-grade token sale platform and cryptocurrency exchange. They announced the completion of their token sale, which saw the issuance of Rock Token (RKT) and had successfully reached its hard cap of US $27 million on February 8th.

Ramy Caspi
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The Gibraltar Blockchain Exchange (GBX) aims to be a world-leading institutional-grade token sale platform and cryptocurrency exchange. They announced the completion of their token sale, which saw the issuance of Rock Token (RKT) and had successfully reached its hard cap of US $27 million on February 8th. 

The move comes after an explosion of interest in digital currencies. Bitcoin rose over 1,500% against the dollar last year. At the same time, startups raised over $4 billion issuing their own digital currencies structured like Bitcoin through ICOs.

So Who and What is GBX?

As a subsidiary of the Gibraltar Stock Exchange (GSX), the GBX was launched with ambitions to be one of the world's first licensed and regulated token sale platform, and digital asset exchange that is operated by a European Union (EU) regulated stock exchange.

The GBX is expected to be a global listing and token sales springboard for utility tokens that have satisfied a strict due-diligence and admissions process, as well as, a leading digital asset exchange. The GBX is therefore working towards establishing a higher industry standard for token issuance and trading. This will facilitate the maturation of the blockchain sector and greater levels of security for all market participants.

Regulators around the world have become increasingly frustrated with entrepreneurs who are using utility tokens to make claims on earnings and resources of their start-up companies. These should be subject to the full force of securities laws. 

Gibraltar's chief executive is Nick Cowan, who spent a career in conventional regulated capital markets including as global head of equities at ING Barings. “We believe that the tokenisation of financial markets and whole economies has only just started,” Cowan told Euromoney

“At the start of 2018, we saw Kodak issue a token and in the next three years, I think we will start to see Fortune 500 companies raising finance through token sales and even governments. Coming from a regulated exchange versed in investor protections, we are now attempting to take a blank piece of paper and write appropriate rules for utility token sales where today there are none.” He adds: “We see the potential for substantial cross-over between the crypto community and mainstream institutional investors.” 

Background

Twenty-five years ago, Gibraltar did something similar for the gaming sector, the territory’s biggest source of income. The territory established a regulatory environment and using the framework issued thirty licences or ‘franchises’. The territory has become the unofficial capital of the global online gaming industry. According to Simon Holliday, founder of consultants H2 Gambling Capital, Gibraltar generated roughly 30% of the total global online gaming sector. This was worth $39.3 billion as of 2016.

The gaming industry is a success story for Gibraltar.

The territory now believes that they are in an ideal position to create a standard of excellence for corporate governance and standards.

Two years ago, the Gibraltar Stock Exchange began to engage with the regulator, the government, and the private sector to ask various fundamental questions.

Is the Blockchain Economy Something That Gibraltar Can Start to Regulate?

Gibraltar has positioned itself at the forefront of businesses that use Distributed Ledger Technology (DLT). On the January 1st 2018, the Gibraltar Financial Services Commission (GFSC) launched a comprehensive set of new laws to regulate "DLT regulatory framework and licensing regime," making it the first country in Europe to take this bold step. “The DLT framework positions Gibraltar as a jurisdiction which facilitates innovation, whilst ensuring it continues to meet its regulatory and strategic objectives, and understands the modern need for robust and speedy interaction with regulators in this fast moving area of business,” the GFSC pointed out in a written statement.

The introduction of these laws is monumental for the territory, because other jurisdictions are currently working on similar intentions. Gibraltar has the clear  advantage because they can immediately offer an EU regulated and legal operating environment. The Gibraltar Stock Exchange (GSX) is regulated by the European Commission as a securities exchange provider.

The GSX wanted to apply the same standards and principles. These include the current rules for any company wanting to list on the exchange to be applied to the token market. Subsequently, the Gibraltar Stock Exchange announced the launch of its new entity, the Gibraltar Blockchain Exchange (GBX).

Gibraltar Blockchain Exchange Aims to Create a System That’s Catered More to Traditional Investors.

The GBX is still not yet "officially regulated", however, the exchange has applied for a regulatory licence in Gibraltar as part of the DLT framework.

Confusing, right? Regulations around the world and companies wanting to be governed are still locked in a bureaucratic battle.


On the February 8th, the GBX announced its token sale for the Rock Token (RKT), its iinstitutional-grade token sale platform and cryptocurrency exchange. Incredibly, the token sale raised its hard cap of US $27 million in 9 seconds. The RKT is the currency of choice for transactions, listings, and other functions on the platform. It’s the medium of exchange and the utility coin that powers the GBX/GSX ecosystem.

How does GBX Work?

GBX CEO Cowan said: "The introduction of rules-based systems is necessary if the blockchain sector is to reach maturity and if actors are to be assured of market stability. Based upon principles of decentralisation and community consensus, the GBX seeks to create a new era of trust, openness and global acceptance for the crypto industry, one quality token listing at a time." Should a company wants to list its ICO, the GBX wanted to create a platform that really delivers. Should a company want to launch its token, they must first appoint a "sponsor firm". Currently the GBX has nine sponsor firms, which guide the prospective issuers throughout the entire listing process and application to the GBX Grid.

Sponsor firms are designed to provide the initial vetting process to ensure only quality issuers make it through the rigorous listing process. This is done before launching their respective tokens on the GBX Grid, after which they are responsible for the token issuers’ post-sale obligations.

This is an analogous to the process used by the Gibraltar Stock Exchange where sponsor firmsare the first line of defense in order to make sure that they can get their tokens listed. GBX’s follows a diligent exchange listings and authorisations processes which is assessed by a team before acceptance on the GBX Grid. This is a clear process that confirms delineation of responsibility which keeps things in timely manner and helps to keep the costs down. The GBX has worked extremely hard to ensure that the people who are buying and investing are following a similar level of standards.

Everybody has gone through stringent AML/KYC and due diligence processes. With this pool of cleared investors and participants, they will evaluate if they want to invest and purchase the token.

In March 2016, the GBX announced that they had attracted over 200 prospective ICOs and they approved its first token list on the GBX Grid: Traceto.ioTraceto.io was brought to the GBX Grid by Broctagon Fintech Group, one of the first wave of founding sponsors in its growing sponsor firm network.

GBX has worked diligently for two years. They are hoping to be in position as the first regulated platform on the market. GBX is creating a platform where its users wont have to do the research or fall for scams plaguing the industry. GBX is offering the whole KYC/AML and listing process which conforms to its blueprint and managed by a sponsor firm.