Jamaica Cryptocurrency Laws Regulation of Digital Currencies: Cryptocurrency, Bitcoins, Blockchain Technology
In Jamaica, cryptocurrency is not explicitly prohibited because it is not specifically addressed in Jamaica’s legislative framework. Nevertheless, cryptocurrency is probably regulated by the general legal framework of Jamaica. Although there is no cryptocurrency-specific legislation, virtual currencies are likely regulated by Jamaica’s existing banking and securities regulations. Specifically, cryptocurrencies may be subject to the following Acts in Jamaica: (1) the Securities Act; (2) the Bank of Jamaica Act; (3) the Banking Services Act; and (4) the Payment, Clearing, and Settlement Act (PCSA). Accordingly, cryptocurrency is presumed to be under the jurisdiction of Jamaica’s security regulators and the Bank of Jamaica (BOJ).
Section 2 of the Securities Act defines “securities” as financial instruments that include the following: “… (c) documents or writings commonly known as securities by order; (d) rights in, or options in respect of, a derivative…; (f) collateral trust certificates, preorganization certificates, or subscriptions, transferable shares, investment contracts, voting trust certificates or certificates of deposit for securities…; or (h) any right, interest or instrument designated by the Commission by order made with the approval of the Minister and published in the Gazette.”
Arguably, cryptocurrencies satisfy the statutory definition of “securities” of the Securities Act because: (1) cryptocurrencies utilize investment contracts and other related documents associated with its application; and (2) the definition of “securities” under the Securities Act is broad enough to include cryptocurrencies. Even if the definition is not broad enough to include cryptocurrencies, they may nevertheless be deemed securities because the Jamaican minister has broad discretion to designate a financial instrument, such as cryptocurrencies, as a “securities.” Therefore, several cryptocurrencies can be correctly classified as securities under the Securities Act.
Another legal argument is that cryptocurrency is a form of “electronic money” (e-money) and therefore is subject to the BSA and the PCSA. Under the BSA, e-money is defined as a “monetary value” that is: (1) stored or recorded by electronic means; (2) provided by the issuer in exchange for the present or future receipt of money or other valuable consideration from the person entitled to make a claim; (3) transferable and accepted as a means of payment by persons other than the issuer, whether via point of sale or similar technology or otherwise; (4) redeemable or repayable, whether in whole or in part, on-demand for cash, by deposit into a bank account or through the use of any automated banking or automated teller machine or any similar device; or (5) not referable to credit facilities, whether secured or unsecured, extended by the issuer.” Cryptocurrencies that classify as e-money are controlled by the BSA. Under BSA regulations, cryptocurrency exchanges must be licensed and regulated by the appropriate Jamaican authorities.
If classified as e-money, cryptocurrency will also be subject to the Payment, Clearing, and Settlement Act (PCSA). The PSCA aims to mitigate risks that hinder the stability of Jamaica’s financial system and prevent loss of confidence in the public payment regime by the general public. To uphold public confidence, the PCSA implements provisions designed to protect the integrity of Jamaica’s financial systems.
Under the PSCA, e-money is defined as an electronically “stored monetary value on any device or instrument or server as represented by a claim on the payment service provider, which is issued on receipt of funds to make payments and which is accepted as a means of payment by individuals other than the payment service provider and includes e-money stored on a device such as a SIM card or a server and accessible via telephone, Internet or other access devices, cards, and other similar instruments.” Cryptocurrency likely satisfies the statutory definition of e-money of both the BSA and the PCSA because it is an electronically stored monetary value that functions as a digital means of payment and is accessible through the internet and mobile phones.
Although Jamaica’s legal framework lacks cryptocurrency-specific legislation, cryptocurrency is probably regulated by existing banking and securities regulations within Jamaica. Presumably, cryptocurrencies classified as securities or forms of e-money will generally be regulated by Jamaica’s existing legal framework. If classified as a security, then a cryptocurrency token will be governed by the Securities Act. In contrast, cryptocurrency that constitutes e-money will presumably be regulated by the BSA or the PSCA. Arguably, cryptocurrencies satisfy the PSCA’s and the BSA’s statutory definition of e-money because they are a digital means of payments that are electronically stored on the internet. Therefore, cryptocurrencies in Jamaica are probably regulated by the Securities Act, the PSCA, or the BSA. Crucially, cryptocurrency tokens must be analyzed on a case-by-case basis to determine whether a particular token is regulated by Jamaica’s general securities and banking regulations.
In 2018, the Jamaica Stock Exchange (JSE) declared its intentions to offer cryptocurrencies on Jamaica’s stock market. Accordingly, Jamaica is among the first stock exchanges worldwide to allow cryptocurrency trading on their stock exchange and is one of the first countries to offer cryptocurrency trading in a regulated and secured environment. As a result, Bitcoin and Ethereum will soon be available for purchase on a national stock exchange.
According to the JSE, there are four objectives of offering cryptocurrency on their stock exchange. First, one objective is to support small and medium-sized enterprises (SMEs) by providing a straightforward process for raising capital through a government-backed stock exchange. Second, Jamaica intends to demonstrate international market leadership. Specifically, Jamaica intends to prove to the world that cryptocurrencies can be traded safely through national market exchanges. In other words, Jamaica aims to prove that cryptocurrency can be traded on stock exchanges like more traditional securities. Third, Jamaica intends to create an inclusive, regulated market that is more accessible to institutions and untraditional investors that are otherwise excluded from lucrative opportunities. Finally, the fourth objective is to streamline the public disclosure process for SMEs, making it easier and more cost-effective to list shares and other assets. For these reasons, Jamaica authorized cryptocurrency to be traded on its national exchange.
In May 2020, the Bank of Jamaica (BOJ) declared its intentions to issue a central bank digital currency (CBDC). Accordingly, Jamaicans will soon be able to use a digital currency backed by the government as a means of payment. The BOJ stated that the CBDC would function like cash because both act as: (1) a store of face value, (2) a medium of exchange, (3) a single unit of account, and (4) a standard of payment. The only difference between l CBDC and physical cash is that consumers will be able to make payments with CBDC anywhere, anytime, on any compatible device through an app on their cell phone. By issuing a CBDC, the Jamaican government can facilitate digital currency transactions subject to Know Your Customer (KYC) requirements. Accordingly, the CBDC project will make it safer for Jamaicans to safely trade virtual currency. Presuming no delays arise, Jamaicans will be authorized to use CBCDs by early 2022.
According to the government, Jamaican consumers and businesses will benefit from the CBDC program in two main aspects: (1) they will benefit from the sheer convenience that a more modern payment system provides, and (2) they will benefit from greater financial inclusion since individuals that do not have regular bank accounts can access CBDC accounts. Likewise, the financial system at large will benefit from CBCDs because the program will (1) increase systematic efficiency while significantly reducing costs for cash distribution and storage, and (2) increase the services available to customers and opportunities for innovation.
Finally, the benefits that the BOJ will receive from the program include: (1) increased efficiency by removing the time and effort it takes to forecast currency needs and order new currency in advance; (2) significant long-term cost savings because there will be no ‘wear and tear’ on digital currency, and it cannot get ‘lost in circulation,’ so there will never be a need for replacement; and (3) the modernization and expansion of BOJ’s currency minting and issuance processes, in addition to the further expansion and modernization of the national retail payments infrastructure in keeping with the desired increased digitization of the economy.
If all goes according to plan, then individuals will be able to use digital currency as a means of payment in Jamaica by 2022. The CBDC program will provide several benefits to Jamaica. Specifically, Jamaican residents and Jamaican authorities will benefit from the access and convenience that CBDCs will provide. Therefore, the government’s program will benefit Jamaica’s overall financial market.
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: