The truth about any great idea is that it is easily understood and the need for it makes sense. This is the case with the Gibraltar Blockchain Exchange (GBX).
The team at the Gibraltar Stock Exchange (GSX), the GBX’s parent company, had been studying blockchain technology for some time. In November 2015, they began planning the “Crypto Securities Exchange.” In mid-2016, the GSX admitted to listing on its regulated Main Market one of the world’s first Bitcoin Asset-Backed Securities (ABS).
Shortly after, the team turned their focus to the emerging world of token sales. It was a market they quickly recognised as lacking in clear standards and practices, investor protection, and sufficient processes for vetting of claims made by issuers. In their experience, the market lacked governance. Without it, this promising sector would never attract sustainable institutional investment, or the kind of resources necessary to secure long-term growth.
It was the need for this kind of clear, professional structure where the GSX saw the best opportunity to contribute. It launched a new subsidiary — the GBX.
Its plans, however, extend well beyond creating a token sale platform and cryptocurrency exchange. The GSX Group intends to build a full fintech ecosystem which offers all the possible services and support that issuers, entrepreneurs and investors need within a transparent, regulated framework.
So, how does it work?
- The role of Gibraltar as a jurisdiction is very important.
Gibraltar is very supportive of blockchain businesses. In October 2017, the Government of Gibraltar, after a long consultation period, published the Distributed Ledger Technology Regulatory Framework (DLTRF). As of 1st January 2018, it is now in force. It is a principles-based, not prescriptive, style of regulation, allowing firms the flexibility they need to work with new technology without compromising on robust standards.
The DLTRF recognises some very important points which others failed to understand in the past. It is not possible to regulate cryptocurrencies themselves but it is possible and reasonable to set standards for people and firms which act on behalf of a third party.
The creation of this framework means that the Government of Gibraltar is taking measures to help protect investors by making sure that business operating in the territory are fit and proper.
The GBX is fully supportive of the DLTRF. It intends to be the first exchange to submit to oversight by the Gibraltarian regulator and become licensed under the regime.
2. The most important thing to understand is the GBX listing process.
The GBX sets a clear listing process to ensure that listing applicants follow its rules.
First, a project must appoint a Sponsor Firm. Sponsor Firms are organisations that have been enfranchised by the GBX to bring listings to market. They act to ensure that listing applicants do not just pay lip service to the rules but actively abide by the letter and spirit of them.
They ensure that a project is eligible to launch a token sale and list on the GBX, advise on how to meet the rules, and work with a project to complete and submit their application. Sponsor Firms also participate in a staking mechanism. They must hold a portion of the tokens of the projects they bring to market. After listing, Sponsor Firms are also responsible for ensuring that projects meet their continuing obligations, which are mostly to do with disclosure of information.
Sponsor Firms can be said to stand behind the initiatives they bring to market and their business reputation is equally on the line.
All of this is designed to help ensure that projects which come to the GBX are acting in ways which are in line with a higher standard of business practice, and that they are making an honest effort at succeeding.
3. The role of the GBX Sponsor Firms is integral to ensuring the well-being of the market. As such, any firm which aspires to become a GBX Sponsor Firm must demonstrate the quality of their management team and sound blockchain experience.
An important set of things to consider are the expectations that the GBX will have of token buyers.
It is important that the token sales launched on the GBX and the projects behind them meet a higher standard. It is important to ensure that the products on offer are of a higher quality but it is also true that issuers and the GBX itself have some expectations when it comes to who is buying tokens.
Know Your Customer (KYC) and Anti Money Laundering (AML) procedures will be implemented at the GBX. In the wider world in 2017, proving source of funds was not necessarily an issue, but moving forward, at the GBX, token buyers will have to prove who they are and disclose where their funds have come from.
For many projects, anonymity was not a problem in raising funds during the ICO itself. Afterwards, many of these same projects have found themselves in difficulty when it comes to more everyday, operational financial relationships. Many banks will not do business with them because they themselves cannot prove the source of funds and because many of the people they sold tokens to are anonymous.
Just as the GBX expects transparency from the projects launching token sales, so it will too demand transparency from buyers. The GBX intends to offer both sides of the market the best in service.
4. The GBX’s structure and processes is the GBX Alliance and the GBX Alliance Council.
The GBX expects scrutiny and transparency when it comes to market participants but also of itself.
The GBX Alliance is a membership body comprised of leading thinkers, advocates, and practitioners across the broader blockchain industry. Members are invited by the leadership of the GBX to help ensuring that exchange reflects the best in thinking and practice and that the GBX proposition never weakens or falls behind the needs of participants.
The importance of the GBX Alliance in shaping the governance and rules of the GBX is further underscored by the election of members to the GBX Alliance Council. The GBX Alliance Council will directly advise the GBX and contribute to its decision-making processes and developing its ethos.
The above outlines the most important aspects of the way that the GBX intends to operate. The Gibraltar Stock Exchange and the GSX Group more widely are also engaging with the blockchain community through a variety of other initiatives.
For example, the GSX has created the Blockchain Innovation Centre (BIC), a centre for fostering the development of new technology, helping bring together people with ideas for new projects, and funding them if appropriate. It has also joined the Ethereum Enterprise Alliance and Hyperledger where it can engage with a wide range of world leaders in developing blockchain technology.
The GBX is preparing itself to deliver best practices both in its operations and thinking, in a regulated environment, raising standards for the whole industry.
Website: https://gbx.gi
Medium blog: https://medium.com/@Gibraltar.Blockchain.Exchange
LinkedIn: https: //www.linkedin.com/company/18286558/
Facebook: https://www.facebook.com/GibBlockEx/
Twitter: https://twitter.com/GibBlockEx
Telegram: https://t.me/GBXCommunity
Reddit: https://www.reddit.com/r/GBXCommunity/
BitcoinTalk: https://bitcointalk.org/index.php?topic=2684176.msg27421066#msg27421066
YouTube: https://www.youtube.com/channel/UC8AFevz1jYcHMXN-GLnae2g
