Dilmun Leach
Partner, Walkers (CI) LP
Jersey
Earlier today the JFSC published new guidance on the tokenisation of real world assets (RWAs) which also includes specific guidance on stablecoins, and has also updated its existing guidance on initial coin/token offerings which was originally published in July 2018.
Walkers is pleased to have worked closely with the JFSC, the Jersey Funds Association and Jersey Finance in the development of this guidance. The new guidance will streamline the application process for RWA tokenisation and bring increased regulatory clarity and execution certainty for applicants.
There has been sustained governmental and regulator backing for the development of Jersey's digital asset industry over the last 10 years, and Jersey is increasingly being seen as a destination of choice for the tokenisation of RWAs.
This guidance provides clear parameters on the JFSC's requirements, and will mean that our clients can tokenise assets such as real estate, fine art or more traditional securities by issuing a digital representation of that asset on a blockchain.
Under the new guidance, key requirements for a Jersey issuer in a tokenisation transaction include:
• The issuer must be a Jersey Company or Jersey Limited Liability Company;
• The issuer must be administered through a regulated Jersey corporate services provider (or "CSP"), with the CSP providing a Jersey resident director to sit on the board of the Jersey issuer;
• Certain regulatory consents must be obtained from the JFSC before any token issuance occurs;
• AML requirements will apply, with KYC/CDD checks being conducted on persons purchasing tokens from the issuer, and on persons redeeming/selling tokens back to the issuer
• Certain audit requirements and custody requirements will apply; and
• A whitepaper or offer document must be submitted to the JFSC which complies with certain content requirements.
Dilmun Leach, partner in the Walkers' fintech team commented: "We welcome the JFSC's publication of the RWA tokenisation guidance notes, and were delighted to have been closely involved in their development leaning on our market-leading experience in the tokenisation space. The JFSC's publication of the guidance notes demonstrates the JFSC's commitment to innovation, and keeping Jersey at the cutting edge of global financial markets. We are proud to have advised on Jersey's first tokenisation platform and are working with a number of other clients to launch tokenisation platforms and products in Jersey, as well as under the laws of Bermuda, BVI and Cayman across our global fintech group."
If you would like further information on the process for procuring regulatory approvals in Jersey for digital asset products, or a comparison across the 6 laws on which Walkers advise, please contact your usual Walkers contact or Dilmun Leach, Sarah Townsend or Amman Bulchandani.
