JERSEY Law and Practice Contributed by: Christopher Griffin, Sophie Hancock, Tshogofatso Dhlamini, Rachael Barber, David Patterson and Mike Kushner, Carey Olsen
Investment Exchanges/Investment platforms An investment exchange or an investment plat - form will require an investment business licence from the JFSC. Online Foreign Exchange Platforms Any online FX platform will require a money ser - vice business licence from the JFSC. 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. 2.4 Variations Between the Regulation of Fintech and Legacy Players As stated in 2.2 Regulatory Regime , Jersey has chosen not to introduce fintech-specific laws or regulations but instead to try and regulate fin - tech (including digital assets) within its existing financial services legal and regulatory regime. 2.5 Regulatory Sandbox Jersey does not operate “sandbox” as such (unlike the UK’s Financial Conduct Authority). However, any Jersey company, limited partner - ship or unit trust is issued with a consent by the JFSC under Jersey’s principal regulation relating to the raising of capital in Jersey, the Control of Borrowing (Jersey) Order 1958 (COBO). The JFSC are able to impose bespoke conditions on a newly incorporated entity’s COBO consent. This has the practical effect of imposing sand - box conditions on the entity – for example, the JFSC may decide that a new fintech business’ turnover may not exceed more than a stated amount without the JFSC’s prior consent, there - by limiting the business activities of the entity. In this way, the JFSC can impose sandbox-like
to register with the JFSC under the Jersey POC SB Law. Whether a digital asset business falls within the Jersey regulatory perimeter for “investment business” (see “Overview of Jersey Regulation” ) depends on whether the relevant digital asset constitutes an “investment” as defined in the Financial Services Law. An “investment” includes “security” the relevant definition of which is set out in the JFSC’s Initial Coin and Token Offer - ings Guidance Note (the “IC/TO Guidance Note” ) for token issuance, which provides that “secu- rity” would typically have characteristics usually associated with an equity or debt security in the traditional capital markets sense, including one or more of the following such characteristics (whether contractual or implied): • a right to participate in the profits/earnings of the issuer or a related entity; • a claim on the issuer or a related party’s assets; • a general commitment from the issuer to redeem tokens in the future; • a right to participate in the operation or man - agement of the issuer or a related party; and/ or • expectation of a return on the amount paid for the tokens. Tokenisation of Real-World Assets In 2024, the JFSC published the Tokenisation Guidance Note, which relates to the representa - tion of physical and traditional finance assets as digital tokens on a blockchain. Please refer to 1.1 Evolution of the Fintech Market for further details.
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