Gibraltar Proposes Legal Framework for Tokenized Fund Shares

Gibraltar is moving to modernize its financial infrastructure with the introduction of the Protected Cell Companies (Amendment) Bill 2026. The proposed law would allow regulated funds to issue shares on distributed ledger systems, ensuring that token holders possess the same legal rights and obligations as traditional shareholders. This move specifically targets protected cell companies—entities often used in insurance and finance that separate assets into independent cells—that operate as experienced investor funds. By integrating blockchain into the legal framework, Gibraltar seeks to streamline ownership records and transfers while maintaining a strictly regulated environment. Under the proposal, ownership must be recorded on blockchain-based registers, and transfers will be executed via smart contracts and cryptographic signatures. To mitigate systemic risk, the framework mandates the use of allow-listed wallet addresses and verified investors, ensuring the system remains within a controlled environment rather than an open, permissionless market. The initiative aligns Gibraltar with a growing global trend of institutional tokenization. Switzerland has already licensed DLT trading facilities, while Singapore and Hong Kong have expanded programs for tokenized wholesale markets and government bonds. Furthermore, the World Bank and Canada have recently completed pilots for tokenized bonds, signaling a broader shift toward digital securities in regulated financial systems.