Blockchain Comparative Guide

Law FirmCarey Olsen
Subject MatterTechnology, Fin Tech
AuthorMr Christopher Griffin
Published date27 January 2023

1 Legal and enforcement framework

1.1 What general regulatory regimes and issues should blockchain developers consider when building the governance framework for the operation of blockchain/distributed ledger technology protocols?

As a matter of policy, Jersey has chosen not to regulate cryptocurrencies (the most obvious application of blockchain technology) within its existing regulatory framework.

Accordingly, the principal laws relating to digital assets are:

  • the Financial Services (Jersey) Law 1998; and
  • the Control of Borrowing (Jersey) Order 1958 (Jersey's principal statute concerning the raising of capital).

1.2 How do the foregoing considerations differ for public and private blockchains?

Jersey's regulator, the Jersey Financial Services Commission (JFSC), does not differentiate between private and public blockchains.

1.3 What general regulatory issues should users of a blockchain application consider when using a particular blockchain/distributed ledger protocol?

The most common application of blockchain technology in Jersey is to cryptocurrencies and any other digital assets.

1.4 Which administrative bodies are responsible for enforcing the applicable laws and regulations? What powers do they have?

Jersey's regulator is the JFSC, which has regulatory responsibility for overseeing the conduct of businesses and ensuring compliance with Jersey's anti-money laundering legislation.

If an activity comes within the jurisdiction of the JFSC, its enforcement teams will investigate and, where appropriate, take action against businesses and individuals that do not comply with Jersey's regulatory and legal requirements. The JFSC has statutory powers to impose a range of sanctions, including:

  • restricting or preventing people from working in Jersey's finance industry;
  • revoking or placing condition on a business licence;
  • issuing public statements;
  • imposing civil financial penalties; and
  • referring cases to the States of Jersey Police for consideration of criminal prosecution.

1.5 What is the regulators' general approach to blockchain?

Jersey is certainly open to blockchain applications and to cryptocurrencies in general. The JFSC approved the world's first regulated Bitcoin fund, GABI Plc, in 2015 and since then, a number of blockchain businesses have established themselves in Jersey. However, Jersey is fiercely protective of its reputation as a well-regulated financial services jurisdiction and the island is certainly not a 'crypto free-for-all'. The application to establish a blockchain business in Jersey will be subject to a degree of scrutiny from the JFSC.

1.6 Are any industry or trade associations influential in the blockchain space?

The Digital Assets Working Group was established in 2017 during the height of the Individual Savings Account boom to assist the JFSC in understanding the emergence of blockchain and cryptocurrencies as an asset class. Representatives from the legal, accounting and corporate service provider sit on the committee, as well as representatives from blockchain businesses.

2 Blockchain market

2.1 Which blockchain applications and protocols have become most embedded in your jurisdiction?

The principal blockchain applications which have become embedded in Jersey relate to digital assets and cryptocurrencies - specifically:

  • utility tokens;
  • defined platforms; and
  • stablecoins.

2.2 What potential new applications/protocols are most actively being explored?

We are seeing some enquiries as to how decentralised organisations can be established in Jersey.

2.3 Which industries within your jurisdiction are making material investments within the blockchain space?

As a financial services hub, Jersey understands that many are trying to make use of blockchain technology in the financial services industry. Accordingly, all service providers (eg, lawyers, accountants, corporate service providers) are investing time and resources in being able to understand, advise on and facilitate newer blockchain applications.

2.4 Are any initiatives or governmental programmes in place to incentivise blockchain development in your jurisdiction?

Jersey has an independent organisation called Digital Jersey, which is government backed and facilitates the development of new technologies to help Jersey become a digital-friendly economy.

As part of Digital Jersey's remit, it can facilitate discussions between blockchain developers on the one hand and the Jersey Financial Services Commission on the other. It also has some business licences which new companies can take advantage of.

3 Cryptocurrencies

3.1 How are cryptocurrencies and/or virtual currencies defined and regulated in your jurisdiction?

Virtual currencies: Jersey's principal anti money laundering law, the Proceeds of Crime (Jersey) Law 1999 (POC(J)L), defines 'virtual currency' as:

any currency which (whilst not itself being issued by, or legal tender in, any jurisdiction) -

(a) digitally represents value;
(b) is a unit of account;
(c) functions as a medium of exchange; and
(d) is capable of being digitally exchanged for money in any form.

For the avoidance of doubt, virtual currency does not include any instrument which represents or stores (whether digitally or otherwise) value that can be used only to acquire goods and services in or on the premises of, or under a commercial agreement with, the issuer of the instrument.

Any person that provides to third parties the...

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