Jersey’s government is putting new limits on who can join cryptocurrency investments in the island.
Initial coin offerings, or ICOs, are a way of raising funds for a business or project by issuing tokens in exchange for an amount of a cryptocurrency such as Bitcoin.
The revised regulations follow warnings from the Jersey Financial Services Commission of the risk of scam ICOs globally.
From now on, ICOs conducted through Jersey legal entities will only be open to companies and legal entities that are incorporated or registered and administered through Jersey’s financial services sector.
In a statement, the States of Jersey said: “The Government is committed to creating a modern digital economy in which innovation in the financial services and digital sectors can flourish.”
“The Government is of the view that this approach to ICOs, by applying regulatory requirements (including anti-money laundering and countering the financing of terrorism requirements) to the regulated institution, strikes the appropriate balance between encouraging innovation in fintech and managing the risk of emerging technology.”
No new laws will need passing to bring the rules into effect, but that isn’t being ruled out if it’s needed in future.
The government says it will closely monitor ICOs: “The Government acknowledges that distributed ledger systems, including ICOs, can be significant building blocks of a modern digital economy, and the introduction of an appropriate and proportionate regulatory regime may encourage innovation.”
“However, there are equally inherent regulatory risks where the development of new innovative technology concepts is concerned. In this regard, the Government, in line with others in the international community, continues to examine how to appropriately cover new concepts, such as ICOs, in the regulatory regime.”
