Blockchain Startups Flock to The Rock
Gibraltar may be known as the rock for the British Royal Navy presence, but it’s becoming a refuge for an entirely different community — blockchain enthusiasts. The British overseas territory is a hotbed for innovation and boasts a regulatory framework for distributed ledger technology (DLT), which has already attracted dozens of blockchain startups to the region.
European trading platform eToro and Hong Kong-based Xapo, which boasts $10 billion of investors’ bitcoin in underground cold-storage vaults strategically placed around the globe, are a couple of blockchain plays that are flocking to Gibraltar’s offshore financial center.
The Gibraltar economy is tiny, as evidenced by GDP of £1.5 billion, which as the FT points out makes it a wealthy jurisdiction based on the small number of locals. But despite being a British territory, Gibraltar is largely independent with its own tax system, etc. Though they are controlled by the UK, Gibraltar has diverged on cryptocurrencies, as evidenced by the decision by the city of London to take a back seat to the cryptocurrency market until some of the kinks get worked out by other jurisdictions.
Meanwhile, Gibraltar, which boasts a population of approximately 35,000, has been able to accomplish what has eluded most other governments around the world, and that’s crafting a regulatory framework for cryptocurrencies. Xapo obtained an e-money license from the Gibraltar Financial Services Commission last year, and the small peninsula began issuing blockchain licenses to startups in January 2018.
Wences Casares, a blockchain pioneer who has influenced Silicon Valley billionaires for bitcoin, is at the helm at Xapo. He was in Gibraltar in recent days meeting with Financial Services Minister Albert Isola among other policymakers, Bloomberg reported. While Xapo already has a presence in Gibraltar, Casares was there to discuss bolstering the startup’s business in the small peninsula.
“We had a good session with Xapo about their plans to expand operations in Gibraltar,” according to Finance Minister Isola quoted in Bloomberg.
Approximately 30 blockchain startups are pursuing a license in Gibraltar, Bloomberg reports. Social trading platform eToro, which is in expansion mode of late, is among them. eToro launched support for trading cryptocurrencies in 2017. Operating as a licensed exchange will bolster its profile in the crypto community.
Meanwhile, Baltic state Lithuania, with a population of approximately 3 million, is another small economy that is embracing cryptocurrencies. The Lithuanian government demonstrated early support for blockchain projects, and like Gibraltar, they have managed to do what many larger governments have thus far failed to do.
They have developed a regulatory framework by which initial coin offerings — public crowdsales that blockchain startups perform to raise funds — can operate. Lithuania has provided clear guidance to ICO companies on issuing security tokens that can legally be traded on exchanges. DESICO is a Lithuania-developed security ICO platform on which issuing companies can list their tokens to be traded, converted to fiat currency, etc.
The emergence of cryptocurrencies has taken the world by storm, and the rise of these smaller jurisdictions that are becoming a hub for fintech activity is similarly surprising. It just goes to show that in a decentralized world, none of the traditional rules apply.
Featured image courtesy of Shutterstock.