Gibraltar Company Formation - Crypto Currency

 

imageThe Government of Gibraltar is very receptive to Distibutive Ledger Technology (DLT), and is encouraging the registation and licencing of companies wishing to work with virtual currency.


Regulation - Licence Requirements

 

If you intend to register a Gibraltar company to hold only your own FIAT money, exchanged for virtual currency, or mined by you, we will need to carry out a risk assesment, however you will not need to be licenced by the Gibraltar Financial Service Commission.

If it is your intention to incorporate a company in Gibraltar for any of the following

  • Create/mine virtual currency for others to buy direct from you or your company.
  • Offer exchange facilities for virtual currency to be exchanged to and from Fiat money.
  • To store, or hold virtual currency, or value for others.
  • To attract third party investments for a project (ICOs/ITOs)

You wiill need to meet the Gibraltar Finance Services Commission requirements and go through the following process.

Evaluation - Risk Assesment

 

The application process will involve a preliminary risk and evaluation exercise carried out by our management and the compliance team of our Corporate Service Provider to risk asses the business and its likelihood of success in obtaining licencing.
The initial fees for this evaluation are £1,200 minimum to £2,000, depending on the complexity of the application and the clarity of its documents and business plan. This fee is payable upfront and is non-refundable.

You will need to provide us with the following;

  • A detailed business plan, covering all aspects of the planned activity for the next 2 years, including the scope of the activity and the processes to be employed.
  • History/CV of principals
  • Source of start-up capital
  • Website address
  • Copy passport for all principals
  • Copy recent utility bill for all principles

We will give judgement on the likelihood of success with the DLT application, but can give no guarantees or be held responsible for any negative criticism.
Moving forward the application to the Gibraltar Financial Services Commission (GFSC) is handled in two stages.

GFSC - Initial Application

 

The Gibraltar Financial Services Commission will carry out an assesment of the business, to determine whether it will meet their requirements and to decide the DLT category. In reaching their decision the GFSC will look at the following;

• how the firm will be applying the distributed ledger technology and its maturity;
• any added complexity due to the use of smart contracts;  
• whether the firm will hold or control client assets; 
• the type of customers the firm will be engaging with, such as retail, experienced or professional investors, or institutional;
• number and variety of products and services offered to customers;
• level of interaction and interplay with other types of regulatory regimes, and or the provision of other regulated or unregulated activities;
• whether the firm will be offering its customers investment-related products and services and the risks and complexity associated with such products and services;
• any functions outsourced to third parties and the materiality of such functions; 
• the complexity of the firm’s organisational structure;
• exposure and vulnerability to money laundering and terrorist financing;
• whether the business model, products and or services have been successfully tried and tested; and
• the scale and size of the proposed operation.

Fees for the initial assesment are *£2,000 payable to the GFSC and £1,800 to FK Corporate Services.

Should GFSC reject the application, fees are not refundable.

Succesful applicants at this stage will be told the assessed DLT category, the assessed full application fee and expected annual fee. At this point, the GFSC will also communicate their expectation with regards to the application of the principles and highlight any specific controls they expect the firm to incorporate. 

*upon succsesful initial application this will be deducted from full application fee

GFSC - Full Application

 
Associate member of the European Union

Full Application and Presentation 
The application process at this stage, will largely mirror the application process applied to all other activities authorised and supervised by the GFSC. 
One exception is that once the firm has submitted a complete application and paid the balance of the assessed application fee, applicants will be invited to deliver a presentation to the GFSC. Any specific requirements based on the nature and complexity of the proposed business will be communicated at the time of the initial application assessment.  
Generally, the presentation is expected to cover the following areas:
• background on the key individuals driving the business including relevant skills and experience;
• business plan, including structure of the company/group, products and services, target market, strategy, etc.;
• financial projections; and
• evidence how the firm will meet the 9 regulatory outcomes/principles.
It is expected that GFSC staff present will include members from the Risk and Innovation team, any individuals required from the Panel of Experts, and any key GFSC decision makers. 
The presentation will be an integral part of the authorisations process and will give the applicant an opportunity to demonstrate how they will meet the GFSC’s regulatory outcomes/principles. We believe that this approach will help reduce the time taken to understand the business, assess the firm’s compliance with the principles and deliver an overall more effective authorisations process. 
Once a licence has been granted, an onsite visit will be completed. This will give the firm the opportunity to evidence to the GFSC that the processes and controls implemented and communicated during the presentation are effective and work in practice. 

GFSC - Full Application Fees

 
Associate member of the European Union

Our fee at this stage is £3,000.

Fees to GFSC will be determined upon DLT Category
Application Fee
The application fee that will become payable on submission of a full application will be as follows and in accordance with the complexity categorisation:

  • Complexity Cat 1 £10,000
  • Complexity Cat 2 £20,000
  • Complexity Cat 3 £30,000

Supplementary Fees
The GFSC has the ability under the fees regulations to charge supplementary fees which may be used to cover the direct costs of the use of the Panel of Experts at authorisation stage. This would be disclosed and agreed with the applicant at the initial application assessment stage. 
Application fees will be non-refundable.

Annual Fees
The annual fees also take account of the complexity of the DLT provider:

  • Complexity Cat 1 £10,000
  • Complexity Cat 2 £20,000
  • Complexity Cat 3 £30,000

Further Fees 
Further fees will be charged based on the size and activity of the DLT provider. The further fees will be developed and set during the second half of 2018. The GFSC will communicate and engage with the industry at this point. 
The further fee will be calculated retrospectively from previous year’s audited financial statements. Accordingly, further fees will not be payable until the second year of operation. 

Other Important Information

 

GFSC recommend that a Gibraltar based lawyer is instructed at the full application stage to ensure a higher rate of success.
Applicant company must be resident and physically operating from own office address in Gibraltar.
All Principals must undergo a “fit and proper” test.
Principals must do a full company presentation in person to the GFSC at full application stage.
Principals must demonstrate capital adequacy.

  • Help & Advice

     
    Contact us with any questions that you may have. We will be pleased to speak with you and will do our best to assist you.
     

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