GUERNSEY Law and Practice Contributed by: Matthew Brehaut and Tom Carey, Carey Olsen
Investors (Bailiwick of Guernsey) Law 2020 (the “POI Law” ) applies to their issue and operation, rather than classifying the issuers as VASPs (see 2.2 Regulatory Regime for further information). Guernsey’s company law also permits the use of blockchain as the register of members, facilitat - ing greater use of tokenisation as a means of transferring ownership. 2.2 Regulatory Regime In Guernsey, a fintech business will need to be regulated by the GFSC if it is conducting any class of “controlled investment business” under the POI Law. Controlled investment business means certain “restricted activities” ie, promo - tion, subscription, registration, dealing, man - agement, administration, advising, custody, and operating an investment exchange ‒ in respect of “controlled investments” (being collective investment schemes and general securities and derivatives). A fintech business will (if it is not also conduct - ing an activity requiring a licence under the POI Law) require a licence under the LCF Law if it is carrying on “financial firm business” . Financial firm business includes: • lending; • financial leasing; • operating a money service business; • facilitating or transmitting money or value through an informal money or value transfer system or network; • issuing, redeeming, managing or administer - ing means of payment; • providing financial guarantees or commit - ments; • trading in money-market instruments; • foreign exchange, exchange, interest rate or index instruments;
• commodity futures transferable securities or other negotiable instruments or financial assets; • participating in securities issues; • providing settlement or clearing services for financial assets; and • providing individual or collective portfolio management services or advice or otherwise investing, administering or managing funds or money on behalf of other persons. As per 1.1 Evolution of the Fintech Market , if a digital asset business falls within the defini - tion of a VASP, that business is required to be licensed as a VASP with the GFSC under the LCF Law. The LCF Law defines “virtual asset” as “a digital representation of value that can be digitally traded, or transferred, and can be used for payment or investment purposes” . However, virtual assets specifically do not include digi - tal representations of fiat currencies or general securities and derivatives as defined in the POI Law and other financial assets. This means that digital representations of “traditional” assets do not constitute virtual assets. As per 1.1 Evolution of the Fintech Market , the LCF Law also imposes a licensing requirement for the operation of a peer-to-peer platform, the operation of a crowdfunding platform, and the provision of alternative non-bank credit or finance intermediation. 2.3 Compensation Models The compensation models used by industry participants to charge customers do not differ from traditional compensation models simply by reason of the fintech nature of their business.
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