What are the appropriate and  highest standards for market integrity? What jurisdictions have followed the recommendations to consider this as a standard, or the IOSCO guidance, or what countries have simply taken existing standards applicable to classic exchanges in the financial services world? 

Recognising the diversity of the assets and activities within the virtual asset marketplace we are happy to have managed the working group engaged by the Government of Gibraltar to develop new regulations setting the standard for market integrity in the virtual asset space. 

The amending regulations add a 10th Regulatory Principle to Gibraltar’s Financial Services (Distributed Ledger Technology Providers) Regulations, requiring that all DLT Providers operating in Gibraltar conduct themselves in a manner which maintains or enhances the integrity of the markets in which they participate. Simultaneously, and maintaining consistency with the approach to the other 9 Regulatory Principles, the Gibraltar Financial Services Commission (GFSC) has published a Guidance Note which sets out its expectations of DLT Providers in this context. The guidance note can be viewed here: https://bit.ly/3vlKdld 

The new regulations and Guidance were drafted by the GFSC and a specialist Market Integrity Working Group which I was happy to co-chair. The Group was made up of a combination of Government representatives and leaders in the blockchain and digital asset space, who were convened for the specific purpose of considering and crafting the legislation and guidance. 

The content provides clear guidelines informed by industry and regulatory experts on the prevention of market manipulation and insider trading together with the creation of disclosure and trading standards.

Minister for Digital and Financial Services, the Hon Albert Isola MP, said, “Gibraltar continues to lead the way in defining standards in the virtual asset sector. As is the case with traditional markets, I have long believed that defining standards of market integrity would be required for the continued development and adoption of this industry. Like any other market, the virtual asset market must operate in a manner that is fair, orderly and efficient, whilst enhancing the levels of trust that firms in the regulated sector currently enjoy. We must ensure that we provide operators with a framework that enables them to maintain the same high standards as operators do in traditional industries. I am most grateful to our panel of experts who have played such an integral role in shaping this new legislation working together with the GFSC and to sector representatives for their invaluable contribution to the industry consultation process.”

Kerry Blight, CEO of the Gibraltar Financial Services Commission commented, “Since the introduction of the DLT regulatory framework in 2018, we have worked with government, specialist advisors and industry to refine our guidance and ensure it is suited to this rapidly developing sector, providing both regulatory certainty to DLT Providers and robust protection to their growing consumer base.

The Market Integrity Principle and Guidance Note further strengthen the framework. They introduce a number of key responsibilities, designed to enable firms to root out insider trading and other forms of market abuse, improve standards around disclosure and transparency, and ultimately safeguard the rights and interests of consumers."

Lee A Schneider, General Counsel at Ava Labs and member of Gibraltar’s Market Integrity working group said, “Market integrity is the next frontier for digital assets regulation, so we naturally see the authorities in Gibraltar taking a leading role in defining the core concepts in a practical fashion that furthers its existing regulatory regime.”

Joey Garcia who co-led the working group commented “It is great to see the standards for regulating the VASP space developing, and to see Gibraltar lead in setting standards, particularly when the FATF have cited market integrity and prudential requirements as factors that jurisdictions should consider when developing regulatory requirements for the space”.

Other members of the Market Integrity working group include: Emma Channing, General Counsel, Satis Group LLC; Joshua Ashley Klayman, Senior Counsel, Linklaters LLP; Roman Beck - Head of European Blockchain Center (University of Copenhagen); Jannah Patchay, Regulatory and Market Structure Advisor, Markets Evolution; Joey Garcia, ISOLAS LLP, Xapo, IOV Labs, Gibraltar; Tongtong Gong, Cofounder of Amberdata; Barbara Halasek, Coinfirm; Nicholas Philpott, Banking Market Structure expert. 

Gibraltar’s is the world’s first purpose-built regulatory framework for DLT businesses and sets out a rigorous authorisation and supervisory process in line with Gibraltar’s vision for the highest standards in regulatory adherence. Since it was first introduced in 2018, Gibraltar has cemented itself as a leading jurisdiction for DLT firms who wish to operate in a regulated environment.

The wording from the above post was taken from the Government Press Release around the new legislation introduced.