The introduction of a “regulatory sandbox” to enable businesses that provide virtual currency exchange services to experiment and test new products and applications in Jersey under light-touch regulation have been welcomed by Ogier's intellectual property, tech and digital team.
Changes to two key pieces of legislation that were approved unanimously in June are now in force – the coupled effect of the reforms and an exemption order means that amendments to the Proceeds of Crime and the Proceeds of Crime (Supervisory Bodies) laws establish a GBP150,000 turnover threshold for Exchangers to develop and test innovative products, services, business models and delivery mechanisms without having to fulfil all of the same regulatory burdens of a bank or other regulated entity.
The changes make virtual currency exchange a supervised business and require Exchangers to register with and fall under the supervision of, the Jersey Financial Services Commission (JFSC). Once an Exchanger hits that GBP150,000 annual turnover threshold, it will then be subject to the usual supervision and fee regime.
Ogier partner Sara Johns (pictured) and associate Steven Meacher, who have written a full briefing on the changes, say that the move balances the requirements of regulation with the desire to create freedom to experiment and innovate in the virtual currency space.
Johns and Meacher are part of Ogier's IP, tech and digital team, which is spread across its Jersey, Guernsey, Cayman and Luxembourg offices, working on Fintech, virtual currency, intellectual property and all areas of new technology.
“With virtual currency transaction values and volumes ever increasing globally, virtual currencies are breaking into the mainstream. A balanced regulatory approach will encourage further development of this Fintech here in Jersey,” says Johns.
“That said, the technology is still developing, and there’s an enormous amount of work to do in developing and testing new products, services, business models and delivery mechanisms."
Meacher adds: “These changes make Jersey a viable venue for that work, which is great news for the tech, Fintech and financial services sectors and may present as an opportunity for Jersey compliance companies and trust companies.”
