Gibraltar, a British overseas territory, has enacted new regulations for distributed ledger technology (DLT) service providers. The paper goes into detail on crypto firms’ duties in the face of market manipulation and insider trading risks.

In particular, Gibraltar’s government issued the 10th Regulatory Principle of the country’s financial services regulation on April 27. The information is contained in a Guidance Note issued by the Gibraltar Financial Services Commission (GFSC), the territory’s principal financial regulator.

The regulation, which was drafted by a special working group that includes government officials and business professionals, establishes operational standards for combating market manipulation.

DLT providers are expected to keep an eye on the movement of large virtual asset holdings and the publication of information that could be used to generate false or misleading market signals, as well as look into whether algorithmic-based systems are being used to generate false data about transaction volumes.

The regulation also compels crypto businesses to look for and prevent insider trading, as well as to share any relevant information with the public “as soon as possible.” The proposed trading guidelines also include steps to limit the ability of liquidity providers and market makers to dramatically change asset prices.

Gibraltar’s Digital and Financial Services Minister, Albert Isola, expressed optimism that the new rules will assist the jurisdiction to retain its existing excellent connection with the crypto industry.

He reportedly commented: “The introduction of the 10th Principle, with a significant input from industry, will develop further our regulatory framework. It provides permissioned firms with clear guidance on the standards that are required of them as well as providing consumer and jurisdictional protection.” 

Fintech lawyer Joey Garcia, one of the working group’s heads, praised Gibraltar’s efforts to comply with FATF guidelines, saying: “It is great to see […] Gibraltar lead in setting standards, particularly when the FATF has cited market integrity and prudential requirements as factors that jurisdictions should consider when developing regulatory requirements for the space.”