Guernsey and Cryptocurrency
Guernsey Cryptocurrency Laws
Regulation of Digital Currencies: Cryptocurrency, Bitcoins, Blockchain Technology
Guernsey does not have any specific regulations governing cryptocurrency or ICO’s (initial coin offering). The Guernsey Financial Services Commission instead regulates cryptocurrency under the same criteria used for any other asset types or structures. [1] The Commission’s decision to regulate cryptocurrency under their already existing framework was based on their belief that virtual currency will interact with regulatory laws “in a number of different ways.” Applicants must demonstrate how they will comply with the laws and rules to counter financial crime and terrorist financing, particularly establishing the identity of both investors and beneficial owners. The Commission has stated that it would continue to be cautious about approving applications for initial coin offerings that could later be traded on the secondary market due to the risk of fraud and money laundering, along with applications for any kinds of digital currency exchanges. [2]
Cryptocurrency or an ICO would most likely fall under one of the counties two financial regulatory regimes: Protection of Investors (Bailiwick of Guernsey) Law, 1987 (as amended) (the “POI Law”) or the Registration of Non-Regulated Financial Services Businesses (Bailiwick of Guernsey) Law, 2008 (the “NRFSB Law”). These laws could result in cryptocurrencies held in funds to receive the appropriate licenses. There are no restrictions on mining virtual currency, no restriction on holding cryptocurrency for investment purposes, and no reporting requirements for crypto payments made in excess of a specific value. [3]
P.S. Insights on Cryptocurrency Legal Issues
Most jurisdictions and authorities have yet to enact laws governing cryptocurrencies, meaning that, for most countries, the legality of crypto mining remains unclear.
Under the Financial Crimes Enforcement Network (FinCEN), crypto miners are considered money transmitters, so they may be subject to the laws that govern that activity. In Israel, for instance, crypto mining is treated as a business and is subject to corporate income tax. In India and elsewhere, regulatory uncertainty persists, although Canada and the United States are relatively friendly to crypto mining.
However, apart from jurisdictions that have specifically banned cryptocurrency-related activities, very few countries prohibit crypto mining.
Our Freeman Law Cryptocurrency Law Resource page provides a summary of the legal status of cryptocurrency for each country across the globe with statutory or regulatory provisions governing cryptocurrency. The globe below provides links to country-by-country summaries:
Is cryptocurrency legal in Guernsey?
Do you have questions about cryptocurrency, digital currencies, or blockchain technology? Freeman Law can help with digital currencies, tax planning, and tax compliance. Contact us now to schedule a consultation or call (214) 984-3410 to discuss your cryptocurrency and blockchain technology concerns.
[1] Global Legal Insights, Carey Olsen, Guernsey blockchain and cryptocurrency regulation 2020, second edition.
[2] Guernsey Financial Services Commission, Virtual currencies, cryptocurrencies and Initial Coin Offerings (“ICO”).
[3] Global Legal Insights, Carey Olsen, Guernsey blockchain and cryptocurrency regulation 2020, second edition.
