As a specialist finance centre with decades of expertise in investment structuring, Guernsey is no stranger to digital asset innovation.
In 2021, the Guernsey Financial Services Commission (GFSC) authorised Guernsey’s first regulated Bitcoin fund and Europe’s first Bitcoin ETF using a Guernsey Private Investment Fund (PIF) structure. Since then, the jurisdiction has continued to support forward-thinking strategies in the crypto space, always underpinned by appropriate regulation.
The GFSC’s latest update reinforces Guernsey’s commitment to engaging with fund managers seeking to offer crypto-related investment opportunities, within a framework of robust oversight. It recognises that, when appropriately run, collective investment schemes can provide suitable vehicles for a range of investors to gain indirect exposure to cryptocurrencies, provided that those fund investors are well informed of the risks and able to bear potential losses.
This guidance reinforces that Guernsey remains open to digital asset innovation, whilst that innovation is managed through clear controls and responsible risk frameworks. The GFSC also continues to take a cautious stance towards Virtual Asset Service Providers (VASPs), particularly those offering retail exchange services.
To support prospective businesses, the GFSC has shared the key factors it considers when assessing applications. These include:
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Track record, experience and resources;
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Detailed risk warnings if targeting non-institutional or professional investors;
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A clear and compelling business model; and
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Risk awareness and appropriate cyber security and operational controls.
There are also enhanced expectations for funds with crypto exposure. For example:
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Mechanisms to ensure that retail investors have received professional advice;
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Mechanisms to ensure retail investors do not commit more than they can afford to lose;
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The regulated status of service providers, including any custodian; and
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Detailed consideration in the Business Risk Assessment to ensure appropriate compliance monitoring plans, testing and risk management processes.
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These are in addition to standard risk mitigations applicable to all regulated funds, which include: fund board oversight; administration by a licensed fund administrator; and disclosure.
As a jurisdiction, Guernsey is building the infrastructure, experience and guidance to support meaningful digital asset investment with the same rigour that has underpinned its broader finance industry for decades. It is a home for thoughtful innovation, backed by a track record in governance, investor safeguarding and regulatory collaboration.
With a maturing global crypto market and increased scrutiny of digital asset firms, Guernsey offers a secure environment for managers to innovate.
