Jersey’s Consultation on Cryptocurrencies & the Future of Fintech

Posted: 10/07/2015

The whole fintech sector has exploded over the last five years, with Europe leading the charge as the fastest growing region in the field. According t...

The whole fintech sector has exploded over the last five years, with Europe leading the charge as the fastest growing region in the field. According to a report by Accenture, global investment in fintech reached a staggering $12.2billion in 2014, tripling the investment report from 2013. Globally, fintech is fast becoming one of the most rapidly expanding areas for investment and technological opportunities.

In Jersey, we describe fintech as:

“The use of innovative digital tools or technology, to deliver or facilitate financial activity. This activity could be regulated or unregulated and could be considered disruptive or constructive to existing practices.”

Jersey is one of the world’s leading international finance centres, and the fintech sector has the potential to build on our pre-existing strengths. We are well-regulated, with a pro-business environment that attracts entrepreneurs and start-ups from across the globe, and we’re also growing our digital and creative skills base, so you can see why fintech is a really exciting opportunity for the Island.

Fintech will lead to the transformation of the entire financial services industry over the coming years; we will see both existing institutions improving their services, and new players complementing or disrupting them. This is why cryptocurrencies and their underlying technologies are important to Jersey – these include Blockchain and platforms for decentralised applications, such as Ethereum. It is essential for Jersey to embrace this technology; if we do, we have the potential to become a magnet for innovative start-ups in this area, which will generate new opportunities for the finance community.

That said, we understand that there are many considerations which come with the development and application of cryptocurrencies. The consultation paper on cryptocurrency and regulation recently issued from Government has highlighted several points of discussion in this area.

Digital Jersey has been working in collaboration with the Jersey Financial Services Commission (JFSC), the Joint Financial Crimes Unit, States Law Officers and Jersey Finance Limited (JFL) on the consultation paper, which you can read in full here, to tackle a key issue in the world of cryptocurrencies: regulation. The consultation paper takes into account a wide range of views from leading organisations and sets out how various jurisdictions from across the globe are regulating this industry, highlighting the risks that the Government believes are associated with virtual currencies in their current form, including money laundering and terrorist financing risks. Using all of this information, the paper discusses a number of options for regulating virtual currency activity, and considers whether there is a case for adopting a standard for distributed ledger technology and the possibility of pan-Channel Island work in this area.

The consultation is open from 9th July until 7th August, but more importantly there will also be an opportunity for individuals to make comments on the consultation paper at the consultation seminar, which will take the format of an open workshop on 3rd August, 12pm – 2pm at St Helier’s Town Hall.

So what is the initial stance of the digital industry on all of this? Well, it’s important to both protect our jurisdiction from risk and create a framework that is business-friendly and beneficial to the innovation and development of the virtual currency sector and our local digital economy as a whole. We welcome the purpose of the consultation and would like to urge as many people as possible to join this discussion, as this could be pivotal for the Island’s development in this sector, and the future of our digital and finance industries.

Register for the seminar here.

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