The new rules take effect in the New Year.

Gibraltar will introduce the world’s first bespoke licence for financial technology firms using blockchain technology as it seeks to attract innovative start-ups ahead of Brexit. 

The move by the British overseas territory is the first of its kind and would recognise the use of blockchain as an approved mechanism for transmitting payments, clearing the path for broader adoption. 

The Gibraltar Financial Services Commission (GFSC) is set to publish guidance on applying its new law for companies that use blockchain to “transmit or store” cash and assets. 

Blockchain rose to fame in 2009 as the technology underpinning bitcoin, the first ever and best-known crypto-currency, but has since garnered attention from some of the world’s biggest banks and companies because of its potential to reconcile transactions without the need for a third-party. 

A blockchain is a virtual distributed ledger of transactions shared peer-to-peer that can record ownership across a public network of computers rendered tamper-proof by advanced cryptography. 

The technology is causing a stir within the financial services sector as its supporters believe it could reduce hidden expenses in the financial system by ousting inefficiencies across areas such as payments, syndicated loans and equity clearing.

"This is the first instance of a purpose-built legislative framework for businesses that use blockchain or distributed ledger technology," Nicky Gomez, the GFSC's head of risk and innovation, told Reuters.

While regulators in Japan, the US and Australia have moved to introduce rules around crypto-currencies and the exchanges they are traded on, Gibraltar would be the first jurisdiction to implement laws around blockchain specifically. 

Gibraltar expects the number of firms applying for the new licence to be well into “double digits” once it launches on 1 January, 2018, Gomez said.