The Jersey Financial Services Commission (JFSC) has published new guidance in response to the growing trend of asset tokenisation.
The JFSC said: “They recognise the innovative potential of blockchain technology and the benefits that tokenisation can facilitate for the finance industry, such as liquidity, accessibility and transparency.
“We monitor global regulatory developments in this space and, in response to the potential benefits and growing demand, this guidance seeks to promote Jersey’s competitiveness as an international finance centre and support industry by clarifying our regulatory expectations when it comes to this technology.
“The guidance is principles-based, allowing its application to a wide array of tokenised products, including equities, units in a fund, and bonds. We take a substance-over-form approach, requiring issuers of tokenised assets to consider the nature of the underlying asset, product and activities when submitting their application.
“We have committed to continue to evolve this guidance through collaboration and engagement with industry, and we thank those that have provided input into its development.”
Click here to read ‘Tokenisation of real-world assets (RWAs)’.
Also, the JFSC has published updated initial coin/token offerings (IC/TO) guidance. This guidance refreshes the original guidance published in July 2018 and reflects updated terminology. The JFSC says that together with the tokenisation of real-world assets guidance, it achieves a set of regulatory guidance that more effectively responds to the distinct nature and use of these assets.
Click here to read ‘Application process for issuers of initial coin and token offerings (IC/TOs)’.
The JFSC’s Chief Risk Officer Chris Gedrych said: “This new guidance underscores the JFSC’s commitment to innovation and support for Jersey as a competitive international finance centre. We will continue to respond proactively and collaboratively to developments in the tokenisation space so that Jersey can continue to benefit from this innovation, while also meeting international standards in fighting financial crime.”
Commenting on the certainty the new guidance provides, Elliot Refson, Head of Funds at Jersey Finance, said: “This new set of guidance provides further evidence of Jersey’s maturity as a virtual assets jurisdiction and should send a clear message to issuers, investors and other stakeholders that it is right at the cutting edge in this space, thanks to the robust, proportionate and forward-thinking approach of our financial services regulator.
“Ultimately, the guidance clarifies that Jersey effectively treats tokenisation in the same way as securitisation. In practice, this means that the regulator grants its consent in relation to the issue of tokens, to confirm that a structure complies with regulation. It is a proactive consent, which can give issuers some much needed certainty and is a marked differentiator compared to competitor jurisdictions.
“This certainty, alongside Jersey having a strong track-record in the securitisation space and having developed such a deep pool of talent to support virtual assets work, puts it in an extremely strong position to maintain momentum in such a rapidly evolving landscape.”
