Gibraltar Could Set Up Hybrid Stock Exchange to Accept Crypto

Gibraltar hopes to add another feather to its crypto cap as British Entrepreneur sees problems with crypto’s pedigree as loan-collaterals due to its volatility.

Richard O’Dell Poulden, British entrepreneur and financier, hopes to create the world’s first crypto stock exchange in the British territory, Gibraltar. Gibraltar has rebranded itself as a forward-thinking crypto and blockchain hub, by approving a regulatory framework for crypto businesses.

Poulden’s company Valereum announced plans to buy a majority stake in the Gibraltar stock exchange (GSX) to create an integrated exchange. This would be a place where conventional financial products could be traded for crypto. According to a Valereum executive, if a company can successfully acquire GSX, normal trades will continue. The only difference is that trades can be paid for in crypto as well as fiat. The stocks will be held in a trust company owned by the exchange. The held stocks could then be used as collateral for property purchases or bank loans. The crypto will not be sold for fiat, but rather used to purchase the stock directly, thus avoiding any capital gains taxes.

Why did Poulden choose Gibraltar?

Valereum initially put forth Bitcoin, Dogecoin, Cardano, Ethereum and Tether as the cryptocurrencies that could be used to buy stocks, though the final list is still pending. Valereum’s acquisition of GSX will require approval from the Gibraltar Financial Services Commission. If the acquisition is improved, Valereum intends to raise  $67.6M to revamp the GSX infrastructure.

Poulden said he chose Gibraltar due to family ties to the region, and also because the government has shown itself to be a first-mover with respect to crypto regulation, giving it an edge over other countries. It has established nine good-practice principles, avoiding rigidity, which would have led to multiple amendments.

Fifteen crypto companies have established headquarters in Gibraltar, with Binance also contemplating setting up shop there.

GSX has had mixed success bringing crypto onto its stock exchange. In 2016, the stock-exchange traded a Bitcoin-backed exchange traded instrument, which was delisted in Feb. 2017. In 2020, GSX launched an exchange-traded bitcoin funds created by a Canadian company, which are still available.

Just a matter of time for crypto, says executive

Carmel King, a director at consulting firm Grant Thornton, says that the FSC has been agile due to its smaller size, and has a good run providing guidance to the crypto sector. Furthermore, King is optimistic that Valereum wants to bring will happen sooner or later. She opines, “Over 2.3 million people in the UK hold cryptocurrency. All of the major investment banks have all set up their crypto desks. The integration is happening across the financial sector.”

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