Guernsey's regulator signals welcome shift to open up crypto-fund opportunities

Guernsey's financial services regulator has given a welcome signal that Guernsey is open to well-managed funds investing into crypto-currencies.

The Guernsey Financial Services Commission (GFSC) has issued a public statement on crypto-funds but has set out clear expectations to professionals about its expectations and factors to be considered as part of the application process.

The statement comes weeks after the GFSC announced an update to already successful private investment fund (PIF) rules, removing restrictions limiting the number of investors and cutting requirements for external auditors and risk disclosure statements to make PIFs more scalable, and reduce operational costs.

The crypto-currency statement was issued after Gillian Browning (GFSC Deputy Director General – Investment, Fiduciary and Pension Division) spoke at a fintech panel at Money 20/20 Europe in Amsterdam last week.

In it, the GFSC states:

• Crypto has been evolving, and some crypto currencies such as Bitcoin, appear to be entering a more mature period
• Appropriately-run funds can provide vehicles for a range of investors to invest indirectly in crypto currencies
• When looking at applications to establish crypto funds, the GFSC will consider the track record of those involved, their business model, and risk awareness, including other factors
• Applications will be judged by the commission's usual standards, but those involving retail investors in particular will have to meet additional, specific expectations
• Although Guernsey has had a VASP regime (for virtual asset service providers to run exchanges for customers to buy and sell cryptocurrencies) for some time, they remain cautious about providers of those services

Partner John Scanlan from Bedell Cristin's Guernsey Investment Funds practice said: "This is a welcome statement from the regulator – the first wave of crypto funds was set up some time ago, but there are always international managers looking to establish these vehicles and Guernsey is perfectly placed to support this activity.

"The two recent moves by the regulator in terms of the PIF rules and the crypto statement are a very welcome sign to the industry that the regulator is forward-looking and prepared to adapt with changing circumstances to open up new opportunities for the industry. Guernsey is very much open to business."