According to reports, it would seem that the island of Gibraltar is preparing for something that could have a truly global consequence for the country in the future. The Gibraltar Stock Exchange (GSX) has been quietly preparing for a corporate takeover that has seen regulators reviewing a proposal that would allow blockchain firm Valereum to buy the exchange in 2022.
Should the proposal be backed and accepted, it would mean that the British overseas territory – which has just 33,000 people – could soon become the host of the world’s first integrated bourse, which will allow conventional bonds to be traded alongside major cryptocurrencies. Indeed, many observers have highlighted that it is a bold move for the small nation, with the move potentially turning the territory into a global cryptocurrency hub. However, many have also pointed to the downside which is that if it fails, it could have an impact on the reputation Gibraltar has around the world, whilst diplomatic sanctions could have an impact on the economy, with the financial sector accounting for around a third of the £2.4 billion economy.
Of course, many will point to the fact that there are a number of superpowers such as China and the United Kingdom who have had their stance on cryptocurrency clear, with the former outright banning it whereas the latter has openly warned against the virtual currency, however that does not appear to have bothered Gibraltar too much as they have simply decided to buck the trend after formally committing to regulating cryptocurrencies to try and future-proof its status as a financial hub.
Why is Gibraltar doing this?
A host of reasons could be considered when thinking about why Gibraltar is looking to make the move to be the world’s first cryptocurrency hub.
There is every chance that the move by the territory could be a huge success, as more and more people around the world continue to adopt crypto for a plethora of different reasons including when making crypto payments. Indeed, there has been a surge in interest regarding the use of trusted crypto casino accepting Bitcoin as many are taking advantage of what using digital assets provides when making transactions. One of the major benefits experienced is faster and cheaper transactions, whilst gambling firms are able to benefit from the fact that there are no chargebacks on crypto payments, either. Many operators have lost out in the past due to punters claiming back the money wagered as they claim it was not them, however the use of blockchain will eliminate this.
However, many will also point to the negative economic reputation that the island has been experiencing recently, with a global reputation of being a tax haven having recently had a damaging impact. Gibraltar denies that they are still the same as they were two decades ago – and have subsequently sued a Spanish newspaper to try and restore its global standing – and have claimed that they have undergone a huge reform.
Albert Isola, who is Gibraltar’s minister for digital, financial services and public utilities, has looked to try and provide investors with assurances by stating: “If you wanted to do naughty things in crypto, you wouldn’t be in Gibraltar, because the firms are licensed and regulated, and they aren’t anywhere else in the world.”
Indeed, it would seem the British overseas territory is making moves that have started to attract interest and attention. With the regulator having already approved 14 cryptocurrency and blockchain firms for its licensing scheme, Valereum has taken note as the company’s chairman Richard Poulden admits they are trying to harness a cryptocurrency sector that is worth the roughly combined value of all companies listed on the London Stock Exchange (LSE): approximately $3.5tn (£2.6tn).
Other countries likely to watch
It is hardly a surprise that other countries will be watching closely in the future. Of course, if it is a success, others will want to ensure they can get involved and enjoy the same rewards, however, there will be some that might decide to impose sanctions if things fail.
An example to have been suggested would be including the US, especially if the crypto platforms are inadvertently given legal approval to commit financial crimes such as money laundering. Growing concerns have continued to increase amid the mainstream adoption of virtual currency.
“It could enable or facilitate money laundering, sanctions evasion, terrorist financing, so everyone’s wary of that as well,” says Charlie Steele, a partner at forensic accounting firm and consultancy Forensic Risk Alliance and a former US justice department official.
“Regulators worldwide, almost all of them really, are approaching it from a position of deep skepticism… so it’s a little outside that strain of thinking for a country to welcome them in to buy a stock exchange.”
Gibraltar insist they are ready
Despite the fact that countries such as Malta have been grey-listed and Singapore making a U-turn on its approval for the standalone crypto exchange Bitget, Gibraltar insists that it is ready and has welcomed crypto firms with its eyes wide open. The country has consulted on its regulation for the sector for four years before introducing it in 2018, helping it to secure a reputation as “Blockchain Rock”, with Isola claiming that the perceived increase in risk makes no sense.
He said: “I don’t understand how there can be any increased risk in Gibraltar when you can go to any other European country today and run exactly the same business without being supervised, without being licensed, and without being regulated. So how can we be more exposed by regulating them? It’s completely the opposite.”