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July 16, 2018

Jersey Island Enforces ICO Investor Protection Measures

Jersey Island Enforces ICO Investor Protection Measures
Jersey Island Enforces ICO Investor Protection Measures

The island of Jersey, a British Crown dependency, has issued a package of measures aimed to protect investors in the crypto funding method of Initial Coin Offerings (ICOs), the Jersey Financial Services Commission (JFSC) announced on Friday. The measures are planned as guidance for ICO issuers and include several issues such as anti-money laundering requirements.

“Most ICOs are unlikely to be regulated by the JFSC. Instead, the JFSC places some conditions on an issuer of an ICO (an ICO issuer),” the regulator explained in the guidance note.

All Jersey-based ICO issuers must file a Control of Borrowing Order (COBO) consent with JFSC, to incorporate the ICO issuer as a Jersey company, which must be administered through a trust and service provider licensed by the JFSC to carry on trust company business (TCSP), the regulator explained.

ICO companies must apply anti-money laundering (AML) and counter-terrorist financing (CTF) measures as well as steps to mitigate and manage the risks of retail investors participating in ICOs.

The token-issuer must have procedures that properly inform investors about risk related ICOs and to use JFSC adopted risk warning:

“Token sales or coin offerings are typically a highly speculative form of investment. Investors should be prepared for the possibility of losing their investment completely. Investment in token sales or coin offerings is not subject to existing capital market regulations and protections.I understand these risks and wish to proceed to purchase tokens or coins from [ISSUER NAME].”

JFSC separated ICO coins in two categories: security and non-security tokens. The first type has the characteristics of equity or a debt security in the traditional capital markets sense, such as the right to participate in the profits or earnings of the ICO issuer, the regulator explained.

The second coin type has two subcategories: utility token, which gives holders a right to access a product or service, and the so-called cryptocurrency token that is developed to be like currency.

JFSC is willing to consider relaxing some conditions for non-security tokens in certain circumstances as they are not deemed securities.

Last month, Binance cryptocurrency exchange announced a plan to open an office in Jersey.

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