Crypto License in Gibraltar

CRYPTOCURRENCY license IN GIBRALTAR

A crypto license, or DLT Provider’s license, is issued by the Gibraltar Financial Services Commission (GFSC) who is also responsible for the overall supervision of the crypto market participants. The main purpose of the license is compliance with AML/CFT rules.

Licensed crypto businesses can benefit from a variety of organisations established to support the development of crypto and other blockchain-based products and services. One of them is the New Technologies in Education (NTiE) group formed by the government in partnership with the University of Gibraltar and several leading crypto businesses. The group aims to offer technology-related education, which can be a driving force behind any business oriented towards innovative solutions.

Gibraltar crypto license

Crypto regulation in Gibgaltar overview

Period for consideration
6 months Annual fee for supervision from €11,800
State fee for application
from 11,800 EUR Local staff member At least 2
Required share capital 24,000 EUR Physical office Required
Corporate income tax 12.5% Accounting audit Required

Crypto Legislation in Gibraltar

In 2018, Gibraltar became one of the pioneering jurisdictions attempting to infuse clarity into the governance of crypto activities when the national authorities enforced the Distributed Ledger Technology Framework (the DLT Framework) containing licensing requirements for crypto and other blockchain-based businesses. Today, the country continues to advance legislation aimed at the integrity of crypto businesses as well as the adoption of blockchain-based products and services.

The Financial Services Act is one of the key pieces of legislation regulating DLT activities in Gibraltar. Up until recently it stipulated nine regulatory principles but it’s now supplemented with the 10th Regulatory Principle for Digital Ledger Technology (DLT), the purpose of which is to prevent and eliminate insider trading along with price and information manipulation. It obligates all DLT providers to conduct their economic activities with integrity so that the market’s reputation remains intact.

According to the Financial Services Act, DLT Provider’s license is a license granted under section 8 of this Act to carry out the controlled activity of providing distributed ledger technology services.

In Gibraltar, the following crypto activities fall under the DLT Framework:

  • Exchange between virtual assets and fiat money
  • Exchange between virtual assets
  • Transfer of virtual assets
  • Administration of virtual assets or instruments allowing control of virtual assets
  • Participation in and provision of financial services related to an issuer’s offer and/or sale of a virtual asset

Licensed crypto businesses must adhere to the following regulatory principles:

  • Conducting their business with honesty and integrity
  • Paying due regard to the interests and needs of each and all the customers and communicating with them in a way that is fair, clear and not misleading
  • Maintaining adequate financial and non-financial resources
  • Managing and controlling their business effectively, including risk assessment and management, and conducting it with due skill, care and diligence
  • Having effective arrangements in place for the protection of customer assets and money when a crypto company is responsible for them
  • Having effective corporate governance arrangements
  • Ensuring that all of the systems and security access protocols are maintained to appropriate high standards
  • Having systems in place to prevent, detect and disclose financial crime risks such as money laundering and terrorist financing
  • Being resilient and having contingency arrangements for the orderly and solvent wind down of the business
  • Having effective arrangements in place to combat insider trading as well as information and price manipulation

Although Gibraltar left the EU along with the UK, its AML regulations remain harmonised with the EU’s Fifth Anti-Money Laundering Directive (AMLD5) and Sixth Anti-Money Laundering Directive (AMLD6) which means that Gibraltar’s DLT businesses must comply with such requirements as proven competence of the senior management as well as implementation of KYC procedures and other internal policies designed to identify and mitigate risks related to customers and countries of operation.

At the national level, AML/CFT obligations are reflected in the Proceeds of Crime Act (POCA) and the Guidance Notes issued under POCA on Control Systems to prevent the use of the financial system for money laundering, terrorist financing and other financial crimes.

Advantages

Cryptocurrency regulation at national level from 2018

All cryptocurrency transactions are regulated by EU law

Flexible and beneficial taxation system

Credit opportunities for crypto start-ups

Crypto Licensing Process in Gibraltar

The process of obtaining a crypto license in Gibraltar is well-structured, transparent and efficient but might be costly depending on the nature of the licensable activities as the amount of the state duty can vary from 11,800 EUR to 35,000 EUR. It takes around three months to process a quality application.

The application process consists of the following stages:

  • Pre-application engagement
  • Initial application assessment
  • Full application and presentation

Pre-Application Engagement

During the stage of the pre-application engagement, a crypto company is encouraged to initiate contact with the GFSC. For starters, applicants should reach out to the GFSC’s Risk and Innovation team to discuss their application proposal, business model and a type of intended economic activities. After the discussion the authority is able to confirm if the activities fall within the scope of the DLT Framework. Only companies using DLT for the transmission or storage of value belonging to others should proceed to the second stage of the application process.

Initial Application Assessment

During the stage of the initial application assessment, an applicant has to submit an initial application assessment request to the GFSC, along with a non-refundable application assessment fee of 2,000 GBP (approx. 2,347 EUR) and relevant documents. This is when the GFSC assesses the complexity of the proposed products or services and the business model as well as identifies potential risks.

Within two weeks, the Risk and Innovation team carries out an initial assessment and categorises the requester according to the inherent risks and complexity of the proposed business model and activities.

The following factors are taken into account when determining inherent risks and complexity of a proposed business model and activities:

  • How the company is planning to use the distributed ledger technology
  • The use of smart contracts and all the pertaining complexities
  • Whether the company is planning to hold or control client assets
  • The type of customers the company will be engaging with (e.g. retail, experienced or professional investors)
  • Number and variety of offered products and services
  • The level of interaction with other regulatory regimes in case of the provision of other regulated products and activities
  • Risks and complexities related to investment-related products and services if the company is planning to engage in such activities
  • Functions outsourced to third parties and the materiality of such functions
  • The complexity of the company’s organisational structure
  • The scale of the proposed operations
  • Exposure to money laundering and terrorist financing
  • Whether the business model and products or services have been successfully tested

Following the initial application assessment, the requester receives an initial assessment notice which contains information about further steps the requester must take prior to applying for the DLT Provider’s license, including a list of required documents and paying a prescribed full application fee. At this stage, an expected annual fee is also communicated to the requester. Once the requirements of the notice are fulfilled, a company can apply for the DLT Provider’s license.

Any material changes to an applicant’s business model will need prior approval from the GFSC who will decide whether the complexity categorisation of the company needs to be amended.

Full application and presentation

A full application must include information about the competence of the founders and directors, a business plan, financial projections and evidence of compliance with the applicable regulations.

Each founder and director of the company must supply the following documents:

  • Notarised copy of an identity document
  • Notarised copy of proof of residence (e.g. utility bills)
  • Certified bank statement
  • Two professional letters of recommendation
  • Confirmation of source of funds
  • Notarised proof of the absence of criminal record
  • CV that includes previous places of work
  • Notarised copies of diplomas of education

The full application fee includes a fixed initial application fee and is dependent on the complexity of the business and the DLT Provider category assigned to the applicant during the initial application stage.

The fees are as follows:

  • Complexity Category 1 – 10,000 GBP (approx. 11,600 EUR)
  • Complexity Category 2 – 20,000 GBP (approx. 23,200 EUR)
  • Complexity Category 3 – 30,000 GBP (approx. 34,800 EUR)

Once the fees are paid and a full application is submitted, applicants are invited to deliver a presentation to the GFSC. Any specific requirements based on the nature and complexity of the proposed business activities are communicated at the time of the initial application assessment.

Generally, the presentation should cover the following areas:

  • Background on the senior management, including relevant skills and experience required to run the business
  • Business plan, including structure of the company, products and services, target market, strategy, etc.
  • Financial projections
  • Evidence of the company’s ability to meet the regulatory principles

The presentation is delivered to the Risk and Innovation team, individuals from the Panel of Experts and any other GFSC decision makers. The purpose of it is to reduce the time taken to understand the nature of the business, assess the company’s compliance with the regulations and consequently speed up the application process.

The authority can only grant a DLT Provider’s license if an applicant provides sufficient evidence that they will comply with the regulatory principles. The authority must justify its decision by sharing guidance on the application of the regulatory principles and the criteria referred to determine whether the applicant is capable of complying with those principles.

A fully licensed DLT Service provider must pay stipulated annual fees that also depend on the complexity of the business and inherent risks. Moreover, such a company must comply with the regulatory principles at all times and inform the GFSC of any internal changes or events that might affect their compliance with the regulations.

The annual fees are as follows:

  • Complexity Category 1 – 10,000 GBP (approx. 11,600 EUR)
  • Complexity Category 2 – 20,000 GBP (approx. 23,200 EUR)
  • Complexity Category 3 – 30,000 GBP (approx. 34,800 EUR)

How to Open a Crypto Company in Gibraltar

To apply for the DLT Provider’s license, a company must be incorporated in Gibraltar. One of the most common legal business structures is a Private Limited Liability Company which can be established within a week by one or more foreigners by registering it with the Gibraltar Companies House. The company’s statutory capital is determined on the basis of the business plan.

Required documents:

  • Articles of Association
  • A detailed business plan, including financial projections for the upcoming period
  • Proof of identity (passport or other) of founders and directors
  • Proof of residential address (bank statement or utility bills received within the last three months)
  • A power of attorney if a company is established remotely

Requirements for a Private Limited Liability Company intending to engage in DLT-related activities:

  • Have at least one shareholder of any nationality (no residence requirement)
  • Appoint at least one director who must have impeccable reputation and actively participate in the commercial activities of the company (no residence requirements)
  • Open a corporate bank account in a local bank
  • Hire at least two employees in Gibraltar, one of them must be a key staff member other than the director
  • Hire a company secretary
  • Publish a business website
  • Have an operating platform
  • Have a registered office in Gibraltar

If the documents are not in English, they must be accompanied by a notarised translation. Should you need a certified translator, we’ll be more than happy to assist.

Crypto Tax in Gibraltar

In Gibraltar, no crypto-specific tax has been imposed but all crypto companies are obligated to adhere to general taxation principles and in most instances pay general taxes which are collected and administered by the Income Tax Office. The tax year runs from the 1st of July to the 30th of June.

You’ll be pleased to learn that no taxes are levied on capital gains, dividends, sales, gifts or wealth. VAT isn’t part of the country’s taxation framework either.

The following general taxes are usually imposed on crypto companies:

  • Corporation Tax (CT) – 12,5%
  • Social Insurance (SI) – 20%
  • Stamp Duty (SD) – 0-3% for real estate or 10 GBP (approx. 12 EUR) per share

The Gibraltar tax treatment is dependent on the company’s nature of economic activities and its residence status. A company is considered a tax resident in Gibraltar if it’s managed and controlled (by making corporate level decisions) from Gibraltar or from outside Gibraltar by persons who are permanent residents of Gibraltar.

The Corporation Tax is regulated by the Income Tax Act of 2010 and is levied on profits that derive from income accrued in and sourced in Gibraltar. This means that income-generating economic activities are subject to the Corporation Tax only if they predominantly take place in Gibraltar.

A crypto company whose income is sourced from an underlying activity that requires a DLT license and is subject to regulation under the DLT Framework, or which is licensed in another country but has availed of passporting rights into Gibraltar, is considered a company whose profits derive from income accrued in and sourced in Gibraltar.

If you’re not sure whether your crypto-related activities are subject to the Corporation Tax, the team of Regulated United Europe (RUE) will be more than happy to provide a tailored consultation.

Crypto companies may be eligible for the following capital allowances:

  • A first year allowance for plant and machinery of up to 60,000 GBP (approx. 69,600 EUR) of purchase or, in the case of higher costs, 50% of expenditure in the period is fully deductible
  • Computer equipment up to 100,000 GBP (approx. 116,000 EUR) of purchase or, in the case of higher costs, 50% of the expenditure in the period is fully deductible
  • A pool allowance of 25% annually on a reducing balance basis

According to the Social Security (Insurance) Act (Amendment Of Contributions) Order 2021, all Gibraltar-registered crypto companies are subject to paying weekly Social Insurance contributions regardless of the location of their employees if they’re registered with the Employment Service. The contributions start from 28 GBP (approx. 33 EUR) per week and can’t exceed 50 GBP (approx. 58 EUR) per week.

Exemption from the Social Insurance applies when:

  • An employee is also employed elsewhere in Gibraltar and their contributions are fully paid by another employer
  • An employee holds a valid A1 certificate issued by another EEA country, where their contributions are paid

A startup with up to 20 employees can receive a credit of 100 GBP (approx. 116 EUR) per employee in the first year in relation to the Social Insurance. Small businesses with up to 10 employees can also claim this credit.

New businesses are also supported through the employment incentive where a further deduction is available based on 50% of the fixed salary cost of new employees hired after the 1st of July 2021. The scheme excludes such employee incentives as bonuses, overtime and various allowances.

Training costs incurred by employees studying for a qualification relevant to the job are allowed as an expense deductible against the profits of a business at the rate of 150%.

Stamp Duty is levied on the transfer or sale of any real estate situated in Gibraltar or shares in a company owning real estate situated in Gibraltar on an amount based on the market value of the real estate.

The Stamp Duty rates vary depending on the value of the property:

  • If the value of the property doesn’t exceed 200,000 GBP (approx. 235,000 EUR) – 0%
  • If the value of the property is more than 200,000 GBP (approx. 235,000 EUR) but doesn’t exceed 350,000 GBP (approx. 411,700 EUR) – 2% on the first 250,000 GBP (approx. 294,000 EUR) and 5,5% on the balance
  • If the property is valued more than 350,000 GBP (approx. 411,700 EUR) – 3% on the first 350,000 GBP (approx. 411,700 EUR) and 3,5% on the balance

At the moment, Gibraltar has only one international agreement on the elimination of double taxation which is signed with the UK. On the other hand, crypto companies can avail of the tax relief which is available to those who are liable to pay the Corporation Tax under the Income Tax Act of 2010 but can prove to the Income Tax Office that they have paid or are liable to pay income taxes in any other jurisdiction on the same profits or gains.

To enable the implementation of transparency in cross-border taxation, Gibraltar has also signed several tax information exchange agreements, the model of which was developed by the Organisation for Economic Cooperation and Development (OECD).

Reporting and Auditing Requirements

According to the Income Tax Act, companies with annual gross income of 1,25 mill. GBP (approx. 1,45 mill. EUR) or more are required to file their tax returns along with audited accounts. If the annual gross income is less than 1,25 mill. GBP (approx. 1,45 mill. EUR), the returns must be submitted along with accounts accompanied by an independent accountant’s report.

Small companies don’t require auditing. A company qualifies as a small company if two of the following amounts aren’t exceeded:

  • Annual turnover – 10,2 mill. GBP (approx. 11,8 mill. EUR)
  • Total assets – 5,1 mill. GBP (approx. 5,9 mill. EUR)
  • Average number of employees – 50

If you intend to run your crypto business in Gibraltar, highly qualified and experienced consultants of Regulated United Europe (RUE) will be delighted to assist you. We very well understand and closely monitor crypto-related legislation in Gibraltar and thus can guide you through the process of establishing a company and obtaining a crypto license. Moreover, we’re more than happy to help you with financial accounting and reporting. Book a personalised consultation now to start your journey in one of the friendliest crypto jurisdictions.

PACKAGE «COMPANY & CRYPTO LICENSE IN Gibraltar»

60, 000 EUR
«COMPANY & CRYPTO LICENSE IN GIBRALTAR» PACKAGE INCLUDES:
  • Incorporating a Gibraltar company to operate the cryptocurrency exchange and to apply for the DLT Provider License.
  • Registering the company with the Employment Service in Gibraltar. Opening vacancies for employees.
  • Drawing up employment contracts and employee handbook.
  • Review of commercial leases for business premises and other property-related work.
  • Review of the business plan, suggestions for changes and improvements, and writing the legal and regulatory parts.
  • Advising on financial projections and capital adequacy requirements.
  • Drawing up corporate governance policy together with other associated policies.
  • Drawing up risk management policy and risk register.
  • Drawing up anti-financial crime policy.
  • Drawing up anti-bribery and anti-corruption policy.
  • Drawing up customer due diligence measures policy.
  • Providing a risk assessment methodology.
  • Drawing up data protection policy.
  • Drawing up terms of use for customers of the exchange.
  • Drawing up privacy and cookie policies.
  • Assistance with the completion of the GFSC application forms (initial and full application).
  • Accompanying the applicant to the presentation to be given to GFSC as a part of the application process.
  • Assistance with opening a Gibraltar bank account.

FREQUENTLY ASKED QUESTIONS

  • Does Gibraltar grant a licence for crypto activities?
    Yes. In Gibraltar, a crypto licence is formally titles the Distributed Ledger Technology (DLT) licence. Following the application process and careful consideration, it is issued to crypto service providers by the Financial Services Commission.
  • How do I get a crypto license in Gibraltar?
    All DLT licence holders in Gibraltar are regulated by the Gibraltar Financial Services Commission. To obtain the Distributed Ledger Technology (DLT) licence, crypto companies must complete the following steps first:
    • Establish a company in Gibraltar
    • Rent (or purchase) a locally based office space for business operations
    • Hire local personnel
    • Provide a report of services that the company intends to offer in the first few months
    • Implement anti-money laundering policies
    • Prove the absence of criminal records for all participants
    • Draft and submit a detailed business plan
  • What are the activities of the crypto license in Gibraltar?
    DLT licence holders are authorized to provide the following services:
    • Exchange between virtual assets and fiat currencies;
    • Exchange between one or more forms of virtual assets;
    • Transfer of virtual assets;
    • Safekeeping and/or administration of virtual assets or instruments enabling control over virtual assets;
    • Participation in and provision of financial services related to an issuer’s offer and/or sale of a virtual asset.
  • How long does it take to get a license?
    The application process itself (gathering information, filing reports etc.) is expected to last up to 3-4 months. Once the application is submitted, the evaluation phase may take 2-6 months. The complete amount of time required to obtain a DTL license is between 5 and 12 months.
  • Can non-residents of Gibraltar own a crypto company?
    Yes. There are no residency or nationality requirements associated with the ownership of a crypto company in Gibraltar.
  • Can non-residents of Gibraltar be part of the board of a Gibraltar crypto company?
    Yes. Crypto companies in Gibraltar must have at least one, but no more than 50 shareholders. They are not subject to any nationality or residency restrictions.
  • Is it necessary to have a banking account to obtain a licence?
    Yes. Opening a bank account is a necessary step for incorporating a company in Gibraltar.
  • What is the minimum authorized capital for a virtual currency service provider?
    Minimum authorized capital depends on the type of company. Private Limited Liability Company (LLC) – 100 GBP (approx. 117 EUR). However, this number may change depending on the crypto business model. Public Limited Liability Company (PLC) – 20,500 GBP (approx. 24,000 EUR). However, this number may change depending on the crypto business model.
  • For how long is a crypto-license issued?
    DTL licences in Gibraltar must be renewed on an annual basis.
  • Is it possible to deposit authorized capital in cryptocurrency?
    No. Cryptocurrency is not seen as a legal tender in Gibraltar.
  • How is the charter capital of a crypto company paid in?
    It must be deposited to the bank account of a crypto company.
  • What does a crypto company need to apply for a cryptographic license in Gibraltar?
    In order to obtain a DTL license, crypto companies in Gibraltar must complete the following steps:
    • Fill out ant prepare the application form
    • Review and amend their white papers and other policy documents that must be submitted alongside the application form
    • Open a bank account
    • Apply for a DTL licence with the Gibraltar Financial Services Commission.
  • Why you should get a crypto license in Gibraltar?

    Gibraltar is a leading jurisdiction for blockchain companies, setting an international example through a legal and regulatory regime that embraces the growth of blockchain technology.

    From a technical point of view, it is also relatively easy to form a company in Gibraltar. Besides, the country allows full foreign ownership, inviting international companies and founders to position their business in the country.

    As a third point, Gibraltar is a relatively low tax jurisdiction, applying a corporate income tax rate of 12,5% to companies who are registered there.

  • Are Gibraltar cryptocurrency companies audited?
    Yes. DTL license holders in Gibraltar are subject to a mandatory annual audit.
  • Can the director of a crypto company be a non-resident of Gibraltar?
    It depends on the type of legal entity that is decided upon incorporation. Whether the company must have a minimum of one or two directors, there is a formal requirement is have at least one director who is a local resident.
  • When are measures to prevent money-laundering and the financing of terrorism applied in Gibraltar?
    These measures are generally applicable to companies in Gibraltar. Generally speaking, crypto companies are expected to observe the rules for market integrity.
  • What difficulties may arise in obtaining a crypto license in Gibraltar?
    First of all the application process may be rather complex. The national regulator is known to be extremely thorough in their evaluation, which may extend the duration of the application process significantly.
  • Where can I open a bank account for a Gibraltar crypto company?
    Every company in Gibraltar must open a corporate bank account with the Gibraltar Bank as part of the incorporation process.

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CONTACT US

At the moment, the main services of our company are legal and compliance solutions for FinTech projects. Our offices are located in Tallinn, Vilnius, and Warsaw. The legal team can assist with legal analysis, project structuring, and legal regulation.

Company in Estonia OÜ

Registration number: 14153440
Anno: 16.11.2016
Licence number: FIU000186
Phone: + 372 5611 0164
Email: [email protected]
Address: Sepise 1, Tallinn, 11415, Estonia

Company in Lithuania UAB

Registration number: 304377400
Anno: 30.08.2016
Phone: +370 661 75988
Email: [email protected]
Address: Lvovo g. 25 – 702, 7th floor, Vilnius, 09320, Lithuania

Company in Poland Sp. z o.o

Registration number: 38421992700000
Anno: 28.08.2019
Phone: +48 50 633 5087
Email: [email protected]
Address: Twarda 18, 15th floor, Warsaw, 00-824, Poland

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