Jersey Drafting Virtual Currency Regulations
by Jason Gorringe, Lowtax.net, London
09 July, 2015
The Jersey Government has announced the launch of a consultation on how virtual currencies, such as Bitcoin, should be regulated.
The Government has said it aims to create a business-friendly framework that encourages innovation, jobs, and growth in both the financial services and digital sectors. It said virtual currency systems can be significant building blocks of a modern digital economy, and the introduction of an appropriate and proportionate regulatory regime in this area is intended to encourage confidence and innovation in the sector.
The consultation paper, released on July 9, 2015, sets out the most prominent money laundering and terrorist financing risks associated with virtual currencies and the options that are available for regulating them. The approaches adopted by other jurisdictions and the views of leading organizations have also been taken into account. The consultation paper also considers whether there is a case for adopting a standard for "distributed ledger" technology (including block-chain technology) and the possibility of potential future pan-Channel Island work (with Guernsey) in this area. Distributed ledger technology is a key innovation of digital currencies that allows a payment system to operate in a decentralized way, without intermediaries such as banks.
The Jersey Financial Services Commission, the Joint Financial Crime Unit of the States of Jersey Police, the Law Officers' Department, Jersey Finance, and Digital Jersey have all been involved in the preparation of the consultation.
Assistant Chief Minister Philip Ozouf said: "Virtual currency systems represent new and empowering technology. This consultation will allow us to take into account a wide range of views when putting in place an appropriate and proportionate regulatory environment. This is about creating a modern digital economy that encourages innovation and the creation of jobs and growth whilst protecting Jersey from the unacceptable use of virtual currency. In the virtual currency marketplace we have a real opportunity to leverage Jersey's leading position in financial regulation to create a business-friendly framework. I am optimistic about our opportunities in FinTech and virtual currency is an important part of this area."
The consultation will run until August 7, 2015, and will include a consultation seminar to be held at the Town Hall, York Street, St Helier, Jersey on August 3, 2015.
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