Pinel Advocates is pleased to have taken part in the consultation regarding the regulation of virtual currencies, which resulted in the Proceeds of Crime (Miscellaneous Amendments) (Jersey) Regulations 2016 (the “Regulations”). The Regulations were adopted by the States of Jersey on 15 June 2016 and are expected to come into force in September.
As an international finance centre, Jersey seeks to lead the way in regulating virtual currencies, which have developed to become a key component in the advancement of the global FinTech industry. Through regulating virtual currencies, Jersey will be able to protect consumers from risk whilst also supporting worldwide technological advancements.
The Regulations cover the business of virtual currency exchange and apply the principles of the Money Laundering (Jersey) Order 2008 to anybody acting as a “virtual currency exchanger”.
According to the Regulations, a “virtual currency exchanger” is anyone providing any form of money in return for virtual currency, or vice versa, save where a company provides the service to a connected company.
A threshold test is set by the Regulations whereby until an annual turnover of £150,000 is reached, those carrying on virtual currency exchange will not be fully supervised by the Jersey Financial Services Commission. However, all such businesses must notify the regulator that they are carrying on the activity of virtual currency exchange. In addition, no fee will need to be paid to the JFSC until that threshold is met.
The threshold test is designed to avoid “red tape”, to allow for innovation and to encourage business start-ups on the Island.