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Gibraltar updates DLT framework to comply with FATF rules

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The Gibraltar Financial Services Commission (GFSC) has updated its regulations governing the operation of distributed ledger technology (DLT) providers to include the latest Financial Action Task Force (FATF) rules. 

The GFSC said this is in response to blockchain’s fast-moving nature, especially as the agency seeks to support companies while protecting consumers.

The updated guidance notes includes the latest FATF recommendations around virtual asset service providers (VASP) and the ‘Travel Rule,’ which requires VASPs to collect and transfer customer information in transactions. GFSC recommends considering “virtual assets as ‘property,’ ‘proceeds,’ ‘funds,’ ‘funds or other assets,’ or other ‘corresponding value.’”

Under GFSC’s guidance, VASPs are required to capture and maintain “robust and accurate records of transactions.” Companies must also update potential investors and customers on risks around virtual assets and require additional factors or onboarding tests.

Gibraltar Minister for Digital and Financial Services Albert Isola said the updated guidance brings the territory closer to meeting evolving global regulations:

“The release of the updated Guidance Notes is another important step forward in the development of the DLT Providers Regulatory framework that has proved so successful to date. It is also a significant milestone in the evolution of our regulations as we embark on the road to achieve ongoing FATF compliance. My thanks go to all parties involved in delivery of these updates.”  

The consultation process began last November and included the GFSC, the Gibraltar Association for New Technologies, and DLT provider licensees.

According to GFSC, the number of licensed DLT firms in the territory has reached 13 firms, including eToro, Huobi, Xapo, LMAX, Bitso, and Gnosis. 

Gibraltar has been hailed as a leader in the crypto industry for its openness and regulatory advances around crypto. It’s even been called the next crypto hotspot.



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Regulation

New York authorizes first Yen stablecoin operator in the US

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New York has given the first authorization to a stablecoin backed by the Japanese Yen to operate in the U.S.

Per a Dec. 29 announcement, the New York Department of Financial Services has granted Japanese firm GMO-Z.com a charter to handle U.S.D. and Yen-backed stablecoins in New York. 

Given New York’s status as a global center, the NYDFS is the most prominent state financial regulator in the U.S. It is also one of the most aggressive. A pass to operate in New York often opens up the rest of the country. 

GMO’s charter is as a limited liability trust company rather than a full bank, the principle difference being in authorization to handle deposits. While a stablecoin operator typically needs the ability to hold reserves of the pegged asset, GMO’s charter limits its rights to hold other kinds of deposits not central to its ability “to issue, administer, and redeem” its stablecoins. 

The right to issue such non-depository charters has been a bone of contention between state regulators like the NYDFS and national banking regulators in the U.S. 

GMO president and CEO Ken Nakamura said: “We’re breaking ground with our move to issue the first regulated JPY-pegged stablecoin, which many see as a safe haven asset.” 

The NYDFS recently made changes to its famous BitLicense, including a conditional format that buddies up newly licensed firms with existing licensees. The first conditional BitLicense went to PayPal, facilitating the launch of its new crypto services earlier this fall with the help of longstanding licensee Paxos.