The Government has announced the development of the world’s first comprehensive regulatory framework governing the clearing and settlement of derivative contracts  that are settled in virtual asset (‘virtual asset derivatives’), through regulated central counterparties.  

A statement from the Government follows below:

Working with the Gibraltar Financial Services Commission (GFSC) and Bullish, a leading virtual asset exchange authorised and operating in Gibraltar, the Government is advancing drafting work on the  legislation that will bring this new framework into effect. 

This groundbreaking initiative will mark a significant milestone in the evolution of virtual asset  regulation, and will confirm Gibraltar’s position at the forefront of regulatory innovation in this space. 

The framework will be the culmination of extensive work carried out by a dedicated public-private  partnership which was formed by the Hon. Nigel Feetham KC MP, with representatives of the GFSC,  the Government, Bullish, and Bullish-appointed private sector specialists. The working group has  taken a methodical and comprehensive approach to considering the scope and content of the  framework, and drafting work has begun. 

The framework will establish robust risk management standards which are aligned with those  governing traditional derivatives markets, but which are tailored to reflect the unique characteristics  of virtual asset derivative markets and the technology that underpins them. The framework will  address key areas such as market risk, counterparty exposure, settlement finality, and custodial  safeguards, will enable effective regulatory oversight, and will ultimately foster trust, resilience and  integrity in this area. 

This framework will constitute another world-first for Gibraltar, following the launch of the  jurisdiction’s pioneering Distributed Ledger Technology (DLT) regulatory framework on the 1st of  January 2018. 

The Minister for Financial Services, the Hon. Nigel Feetham KC MP, welcomed the news saying: “This  initiative reflects Gibraltar’s ongoing commitment to responsible innovation. We are proud to lead  on the global stage by introducing a framework that fosters trust, resilience, and integrity in virtual  asset markets. 

“Bullish was one of the first DLT firms established in Gibraltar and they are a significant player in the  international market place. The work we have done together on the proposed clearing and settlement  framework will once again keep Gibraltar at the forefront of regulatory development in the virtual  assets space.

“I am grateful to Bullish and the GFSC and their teams for their excellent work in partnering together  to deliver this innovative framework, and I am very much looking forward to its introduction and the  creation of a new line of business for our industry.” 

Bullish Group CEO, Tom Farley, commented, “We are excited to be working with the Gibraltar  Government and grateful to Minister Nigel Feetham KC MP for his energy and enthusiasm in  supporting these proposals. This partnership between the private sector, the Government, and the  Regulator exemplifies how innovation can thrive within a robust regulatory framework, benefiting  everyone involved and bringing greater confidence to the marketplace.” 

The Government expects legislation to be drafted shortly and consultation with the industry to follow  in the usual manner.