Gibraltar Advances Legislation for Tokenized Fund Shares

Gibraltar has taken a significant step in the integration of blockchain technology into its financial sector by introducing legislation that legally recognizes tokenized fund shares. According to Cointelegraph, the new law allows certain regulated funds to issue shares on distributed ledger systems, granting investors the same rights as traditional shareholdings. This development is encapsulated in the Protected Cell Companies (Amendment) Bill 2026, which states that holders of share tokens are shareholders with equivalent rights and obligations as those holding traditional cell shares. Protected cell companies, often found in insurance or financial sectors, consist of a core organization linked to several independent cells, each maintaining its own balance sheet. The proposal, pending approval from the Gibraltar Financial Services Commission, targets protected cell companies operating as experienced investor funds. It mandates that ownership records be maintained on blockchain-based share registers, ensuring tokenized shares are legally equivalent to traditional certificates. The framework imposes strict rules for custody and transfers, restricting access to verified investors and allow-listed wallet addresses. It also requires disclosures on technology risks, cybersecurity, and recovery procedures. Companies must retain control over the underlying infrastructure, ensuring the system remains within a regulated environment rather than an open, permissionless market. Under the proposed legislation, tokenized shares can be issued and transferred using smart contracts and cryptographic signatures. Blockchain records are recognized as valid instruments for ownership, transfer, and recordkeeping under existing company law. The bill must now navigate Gibraltar’s legislative process before it can be enacted. Globally, governments and financial institutions are increasingly integrating tokenized assets into regulated financial systems, developing legal frameworks and market infrastructure for blockchain-based securities. Switzerland was among the first jurisdictions to incorporate tokenized assets under existing financial law, with its regulator approving a crypto fund in 2021 for qualified investors. In 2025, Switzerland expanded this framework by licensing its first distributed ledger technologies (DLT) trading facility, enabling tokenized securities to be traded and settled on regulated infrastructure. In 2022, Singapore launched Project Guardian to test tokenized assets in wholesale markets, while Hong Kong has issued and expanded a program of tokenized government bonds since 2023. In 2024, the World Bank issued a Swiss franc digital bond on Switzerland’s SIX Digital Exchange with settlement using central bank digital currency. Most recently, in March, Canada completed a pilot that issued and settled its first tokenized bond on distributed ledger infrastructure.