Disclosure: Smith + Crown was a compensated advisor to this project.
The Gibraltar Blockchain Exchange (GBX) proposes to function as a blockchain-based marketplace for utility tokens and other digital assets that will be regulated under the authority of Gibraltar’s Financial Services Commission (GFSC). The platform will also host vetted ICOs within a process that could make meaningful strides towards improving the token sale space’s best practices. The GBX project is the creation of the GSX Group Limited, which operates Gibraltar’s Stock Exchange, a regulated market within the European Union. GBX’s Rock (RKT) Token will play a range of access and payment functions within the GBX network, which is anticipated to expand into a multi-segment ecosystem.
What is the Project?
GBX intends to establish a decentralized, regulated exchange for the trading of utility tokens where issues admitted for trading will agree to abide by the exchange’s standards for behaviour and disclosure. GBX’s token sale platform will have an additional, more demanding set of standards designed to influence companies’ behavior. Traders and investors seeking individual access to the GBX exchange will also be required to meet KYC/AML standards in order to trade upon the exchange. The range of GBX’s planned trading services includes using both cryptocurrencies and fiat to purchase major cryptocurrencies such as Bitcoin, Ethereum, Litcoin, Dash, and Ripple, as well as utility tokens.
Of particular interest is the planned GBX Market, a vetted ICO platform. While a number of such platforms have lately emerged or are under development, such as tZERO or BlockEx, GBX has developed several unique mechanisms relative to peers.
- GBX’s sponsor system: requires projects aiming to list on the GBX Market to enlist a project sponsor from the list of GBX-approved sponsor firms. Upon the sponsor’s completion of due diligence on the project, the sponsor firm will make the official listing submission to the GBX. Should the project be approved for listing, the sponsor is required to stake tokens representing a portion of the amount to be raised during the ICO as a guarantee of the project meeting its listing requirements, with the tokens to be refunded over time. The intent is to ensure only quality projects are listed on the exchange. While sponsors have yet to be announced, GBX has published a draft of sponsor rules that will illustrates their roles and responsibilities.
- GBX’s RKT Token will serves as an access token that will also satisfy certain filing and other payment requirements within the GBX ecosystem, is staked at the time of new listings, and provides early access for holders to certain ICOs upon the platform.
- GBX will be aligned with Gibraltar’s Distributed Ledger Technology Regulatory Framework, announced in 2017 and finalized and put into effect January 1st, 2018. GBX plans to align its listing criteria for both the exchange and the ICO platform with guidance from the GFSC, providing GBX with unique regulated status.
GBX also intends to develop a second exchange, the GSX exchange, for the trading of securities tokens. This is significant because securities tokens represent a complex topic and regulated venues for the trading of securities tokens have yet to emerge and prove themselves. The GSX is planned to function as an auditable, blockchain-based exchange where all participants will be registered holders of securities tokens, satisfying concerns of regulators regarding transactions in securities, while also allowing a wide range of token issuance from traditional and mainstream companies. GBX plans to apply for a license to establish the GSX exchange during early 2018, with preliminary plans to operate the GSX as a centralised exchange beginning in Q3 2018 before transitioning to a blockchain-based system in Q4 2018.
GBX is focused on creating an exchange that will be accessible to a wide range of both professional and retail investors. For one, efforts to create a carefully curated selection of tokens seeks to reassure investors that assets on the exchange are high quality. Pushing some measure of due diligence onto Sponsors adds another layer of review while lowering the reporting and coordination burden for issuing projects. Further, GBX plans to support liquidity on its exchange by actively serving as a market maker for tokens listed on the exchange. Further, it will assist those tokens in interlisting on other exchanges, which should bring additional liquidity allowing holders to easily trade into and out of positions.
What is the Project Status?
Portions of the project are ready to come online early in 2018, with a number of additional developments planned for the latter portion of the year. In particular, the GBX digital asset exchange is planned to launch during Q1 of 2018, following the token sale. Permit applications to the GFSC for the establishment and operation of the GSX are also planned for Q1 and Q2 of 2018. The second half of 2018 could see operations and trading begin on the GSX, assuming permit applications are speedily resolved. Beyond 2018, the initial road map calls for the expansion of the GBX ecosystem throughout the UK, Europe, Middle East and Asia.
What is the Token Being Sold?
GBX will employ the ERC-20 Rock (RKT) Token as a utility token with multiple uses within the GBX ecosystem. One use of the token will be to pay listing, application, and sponsor fees, while sponsors will, as noted, also be required to stake tokens as part of the listing process. The Rock token will equally be used to pay trading fees on the exchange, and for corporate or fund services available to companies within the system. In addition, companies conducting ICOs on the GBX platform will be required to raise at least 10% of total funds raised via Rock Tokens.
The token also has a membership element, providing holders with access to (currently unspecified) campaigns and projects to be developed by GBX and its partners, and other (also unspecified) potential discounts on programs within the GBX ecosystem that remain to be developed. The token also provides holders with early access to token sales in the case of holders of more than $1,000 worth of tokens, as well as voting rights on different initiatives. Overall, the token seems designed to serve a broader role than a simple access or payment token, one that could potentially help GBX develop as an ecosystem and a community.
Total token supply for the Rock Token is 900 million. The base token sale price will be $0.10 per RKT, with funds to be raised in either USD or ETH. 318 million, or 35% of the total token supply will be sold to the public during the sale. A private pre-sale was conducted in December 2017 during which time 258 million tokens were sold, with the balance of available public sale tokens to be sold during February 2018. 13.7% of tokens will be reserved for GBX founders and employees, with lock-up periods extending over three years. An additional 13%, or 117 million RKT, are reserved for early investors, partners, and advisors, subject to 6 to 12 month lock-up periods. An additional 10% will be allocated to community development, including tokens allocated to the GBX Alliance, the GBX Alliance Council, and the GBC Blockchain Innovation Centre and other community development initiatives. Finally, 27% will be retained as a reserve, to be used by GBX to stabilize or develop the ecosystem as conditions require or opportunities present themselves.
Of funds raised during the public sale, 40% will be allocated to develop GBX’s technology and liquidity provisioning features. 15% will be allocated to marketing the platform, with 13% dedicated to security provisions. 12% will go towards developing the GBX team, with 10% reserved to bolster the exchange’s capital and the balance to licensing and development.
Who are peers and competitors?
As observed during our recent Covesting article, the exchange space has been an active sector of ICO markets, with multiple groups seeking to establish positions within the crypto space. This trend has only continued, with a number of additional projects with ICOs underway or recently completed, as illustrated in the chart below.
Despite this activity, GBX’s project to create an officially regulated exchange nevertheless places it within a limited subsector of the overall market focused. Should GBX’s plans to develop the GBS platform for the trading of securities token be realized, it will place itself within an even more restricted group.
Who is the team Behind the Project?
GBX, as part of the GSX Group, is led by an executive committee comprised of seven individuals with a range of capital markets, legal, and finance experience. They are in turn supported by an extensive IT team tasked with developing the exchange’s structures. Amongst the team are CEO Nick Cowan, the founder of the Gibraltar Stock Exchange, who has extensive experience in capital markets. CFO Adrian Hogg is an accountant with extensive financial and regulatory experience. Chief Marketing Officer Philip Young holds a CFA and has more than 30 years experience in the investment industry, including participating in the founding of the Gibraltar Stock Exchange. Within the tech team are also experienced blockchain developers including Chief Blockchain Officer Floyd DCosta, co-founder of Block Armour, and Samuel Reid, Chief Blockchain Engineer, with a diverse technical background. They are also supported by a diverse, experienced advisory board.