When we started PayPro on year 2015, we knew that our ultimate goal was to set a digital bank at some point. Since that goal was too ambitious for us by then, we started by creating an online payments tool based on Blockchain. As we knew that business felt under the Payment Services regulations, we tried to become regulated by Spain’s financial authority. However, we saw that our country was not ready for such business and hence, decided to establish our company in the United Kingdom. By mid-2016, the UK Financial Conduct Authority granted us an authorization as a Payment Institution with passporting rights to all the European Economic Area.
As soon as we decided it was time to evolve by early 2017, we closed the payment tool, which was transacting more than $500,000 per month from more than a 100 companies, and cancelled our authorization as Payment Institution.
However, a new challenge was yet to come; how would we regulate the ICO? Again, we tried to become regulated by the Spanish financial authority, and again, we were not successful. Obviously, the reasons for that had nothing to do with PayPro, but with lack of clarity from the regulators when they were asked about ICOs. For that reason, we decided to emigrate again and seek for blockchain-friendly regulators. According to our research, 3 countries were good candidates; Estonia, Switzerland and Gibraltar.
We finally chose to establish in Gibraltar given our understanding that the jurisdiction is crypto-friendly. On the 1st January 2018 the distributed ledger technology (DLT) framework came into effect. This means that firms in Gibraltar, that use DLT to store or transmit value belonging to others, now have to apply for a licence from the Gibraltar Financial Services Commission. Gibraltar is the first jurisdiction to introduce a DLT regulatory framework. Whilst this does not apply to ICOs, we understand that Her Majesty’s Government of Gibraltar intends on publishing complementary Regulations for ICOs in the very near future. We are of the view that better governance will help token sales to continue to gain traction as an important funding model and we are therefore delighted to have established in Gibraltar.
