Gibraltar Proposes Tokenized Funds Regulation to Bolster Compliance

Gibraltar is moving to codify the use of tokenized fund shares within its financial framework, authorizing certain regulated funds to issue shares on distributed ledger technology (DLT) while preserving investor rights. The Protected Cell Companies (Amendment) Bill 2026 would recognize a share token holder as a shareholder with the same rights and obligations as holders of traditional cell shares, linking ownership to asset pools within protected cell companies.

According to Cointelegraph, the proposal would require approval from the Gibraltar Financial Services Commission and targets protected cell companies operating as experienced investor funds. It contemplates blockchain-based share registers for recording ownership, with tokenized shares legally equivalent to conventional share certificates.

The framework imposes strict custody and transfer controls, restricting access to verified investors and allow-listed wallet addresses, while mandating disclosures on technology risks, cybersecurity, and recovery procedures. Companies would retain control over the underlying infrastructure, keeping the system within a regulated environment rather than an open, permissionless market.

Under the proposal, tokenized shares could be issued and transferred via smart contracts and cryptographic signatures, with blockchain records recognized as valid instruments for ownership, transfer, and recordkeeping under existing company law. The bill must advance through Gibraltar’s legislative process before it can take effect.

Related developments in the digital-asset regulation space have been highlighted by industry coverage, underscoring a broader shift toward integrating tokenized assets into regulated markets.

Source: Gibraltarlaws.gov.gi

Key takeaways

• The Protected Cell Companies (Amendment) Bill 2026 would permit tokenized fund shares to be issued on distributed ledger technology, with token holders treated as shareholders under existing rights and obligations.
• Approval from the Gibraltar Financial Services Commission is required, and the measure targets PCCs operating as experienced investor funds.
• Ownership records would be maintained on blockchain-based share registers, with tokenized shares legally equivalent to traditional share certificates.
• Custody and transfer rules would restrict activity to verified investors and allow-listed wallet addresses, alongside mandatory disclosures on technology risk, cybersecurity, and recovery procedures.

Gibraltar’s tokenization framework in context

The bill envisions tokenized shares that are issued and transferred using smart contracts and cryptographic signatures, with blockchain records recognized as valid under current company law. By keeping the underlying infrastructure within a regulated environment, the approach aims to balance innovation with supervisory oversight and investor protection. The measure would not create a permissionless market; rather, it anchors tokenized equity in a governance and custody framework that aligns with established fiduciary and regulatory norms.

As the legislative process advances, the emphasis on verified investor access and technology risk disclosures points to heightened KYC/AML compliance requirements for PCCs leveraging tokenized instruments. The Gibraltar FSC’s involvement signals a tailored, risk-based approach to tokenized fund governance that could influence similar regimes in other jurisdictions contemplating regulated token markets.

Global momentum: tokenized assets in regulated markets

Gibraltar’s contemplated framework sits within a growing global trend of tokenized assets moving from pilot programs to regulated market infrastructure. Several jurisdictions have advanced tokenized securities under robust legal and supervisory regimes:

• Switzerland: The regulator (FINMA) approved a crypto fund in 2021 for qualified investors and, in 2025, licensed its first distributed ledger technology trading facility to enable tokenized securities to be traded and settled on regulated infrastructure.
• Singapore: Project Guardian, initiated in 2022, tested tokenized assets in wholesale markets as part of a broader exploration of DLT-enabled capital markets.
• Hong Kong: Tokenized government bonds have been issued and expanded since 2023, reflecting active public-sector participation in tokenized finance.
• Global settlement infrastructure: In 2024, the World Bank issued a Swiss franc digital bond on Switzerland’s SIX Digital Exchange with settlement conducted via central bank digital currency, illustrating central-bank–aligned settlement for tokenized debt instruments.
• Canada: In March, a pilot successfully issued and settled its first tokenized bond on distributed ledger infrastructure, marking a notable cross-border development in tokenized sovereign-like debt instruments.

These cases collectively illustrate a shift toward regulated environments for tokenized securities and bonds, combining governance frameworks, custody controls, and supervisory oversight to mitigate risk while expanding access to digital-asset markets. Industry observers have highlighted the importance of aligning tokenized offerings with existing corporate and securities law, AML/KYC standards, and cross-border regulatory harmonization. The European Union’s MiCA framework and parallel U.S. regulatory conversations continue to shape how tokenized assets are treated across jurisdictions, with particular emphasis on licensing, disclosure, and custody arrangements intended to preserve financial stability and investor protection.

In the broader policy context, the ongoing evolution of tokenized asset markets is being tracked for potential implications on licensing regimes, banking integration, and cross-border settlement infrastructure. As Gibraltar demonstrates, regulators appear inclined to integrate tokenized instruments within familiar legal constructs, rather than create entirely new regimes for each innovation, thereby facilitating compliance, audits, and enforcement activities for market participants.

Closing perspective: As tokenization moves deeper into regulated markets, ongoing oversight and international coordination will be critical to address unresolved issues in custody, cyber risk, and cross-border transfer of tokenized assets.

This article was originally published as Gibraltar Proposes Tokenized Funds Regulation to Bolster Compliance on Crypto Breaking News – your trusted source for crypto news, Bitcoin news, and blockchain updates.