JERSEY Law and Practice Contributed by: Christopher Griffin, Sophie Hancock, Tshogofatso Dhlamini, Rachael Barber, David Patterson and Mike Kushner, Carey Olsen
currencies and/or tokens are treated as another asset class within Jersey’s existing financial ser - vices legislation. The key factors are the underly - ing purpose of the tokens and whether they are tradeable or transferable. Please see 1.1 Evolu- tion of the Fintech Market for the classification of tokens in Jersey. As stated in 1.1 Evolution of the Fintech Market , stablecoins are now viewed as tokenised real- world assets. The JFSC will require the following information to be included in any application to launch a stablecoin (although it should be noted that this is not an exhaustive list of the required information): • details of the assets being held as collateral (eg, cash and cash equivalents) and clear information on the short-term liquidity of those assets; • collateral custody arrangements – for exam - ple, whether there are multiple custodians to reduce any concentration risk; • information on who may directly purchase the stablecoins from the issuer (eg, author - ised participants) and who can redeem their stablecoins for fiat currencies; and • details of any de minimis threshold for issu- ance and/or redemption of the stablecoins. 10.4 Regulation of “Issuers” of Blockchain Assets The JFSC’s IC/TO Guidance Note and the Tokenisation Guidance Note require issuers of blockchain assets to comply with certain require - ments in order to issue and tokenise blockchain assets such as cryptocurrencies, tokens and stablecoins. As mentioned in 6.2 Regulation of Different Asset Classe s, the JFSC views crypto as “sen- sitive activity” under the JFSC’s SBPP. On that
basis, any Jersey issuer of a cryptographic coin or token will need to comply with the require - ments relating to the relevant category of token under the IC/TO Guidance Note (which will vary according to factors such as whether or not the token is a security token) or the Tokenisation Guidance Note and obtain a bespoke COBO consent from the JFSC. 10.5 Regulation of Blockchain Asset Trading Platforms Blockchain asset trading platforms that facili - tate the trading of security tokens will require an investment business licence under the Finan - cial Services Law. Even if the blockchain assets do not constitute security tokens and therefore would not trigger the above-mentioned require - ment, the JFSC regards crypto as a sensitive activity (see 6.2 Regulation of Different Asset Classes ), so the trading platform would still be subject to quasi regulation by the JFSC. In the event that the operator of the trading plat - form may be considered a VASP, then it would be required to register for AML purposes in accordance with the Jersey POC SB Law. This is an in-depth process. 10.6 Staking Generally, staking is unregulated in Jersey (pro - vided that the staking activities do not involve establishing or operating an investment vehicle).
Further advice is recommended. 10.7 Crypto-Related Lending
Lending of cryptocurrencies is not a regulated activity in Jersey. However, as the JFSC views crypto as a sensitive activity (see 6.2 Regula- tion of Different Asset Classes ), further advice is recommended if such activities are proposed.
444 CHAMBERS.COM
Powered by FlippingBook