The Jersey government is proceeding with its plans to pass legislation next year which will establish rules for businesses that work on the island using cryptocurrencies. Jersey’s Chief Minister’s Department released a policy document outlining how its approach to digital currency regulation will focus on exchanges, ATMs and other services linking traditional and digital currency. Given the emerging state of the technology, the government decided against creating a full licensure regime, like New York’s BitLicense, deciding instead to view it more as a work-in-progress. They noted the need to weigh measures designed to protect the island from financial crime against the risk of suffocating innovation and expansion by restricting Fintech.
Prior to the release of this policy statement, the government held a period of public comment and feedback on whether or not virtual currencies should be regulated, which included an open seminar to 70 individuals. Assistant chief minister, Senator Philip Ozouf, said he was moving to bring draft legislation to the island’s parliament in early 2016; however, he noted that it was only a starting point based on the initial responses they had received, designed to allow growth of the market whilst providing a measure of security.
The documentation lays out how statutes governing the activities of money services businesses will apply to companies on the island that exchange digital and fiat currencies. It states that companies ‘acting as an interface between legacy financial systems and virtual currencies’ will fall under this definition (exchanges and ATMs) and will be required to register with the Jersey Financial Services Commission (JFSC). Annual transaction totals exceeding £150,000 will be subject to the JFSC’s jurisdiction, requiring compliance with their rules and paying a fee (amount undisclosed). Companies with a trading total less than the £150,000 threshold will be exempt; with plans for reclassifying companies crossing the threshold either way in the works. Those companies under the threshold will still be subject to JSFC monitoring and policing if suspected of being involved with financial crime. The government believes these restrictions will meet the need for startups to be able to experiment with new and grey areas of technology.
To aid in their efforts moving forward, the government is forming new working group with an industrial body, Digital Jersey, to monitor the effect of the regulatory policy as the technology evolves, and ensure people in the industry can communicate with the JFSC and government on the effects of the regulation. The government has also noted the need for them to monitor and react to developments in the technology to allow the island to take advantage of opportunities available. Investigation into how to proceed will be carried out jointly with the JFSC and Digital Jersey.