Supporting Growth with Digital Finance (2025-12-11)

Summary

This is a GFSC consultation paper proposing a package of reforms to Guernsey's regulatory framework for digital finance, covering virtual asset service providers (VASPs), stablecoins, tokenised funds and securities, digital asset custody, insurance and anti-financial crime technology. It is a draft for industry feedback, not yet a binding rule; the Commission is seeking comments before finalising any changes.

• VASP definition: Proposes amending the LCF Law definition of VASP activity to cover services provided for or on behalf of another natural or legal person, aligning with FATF standards and reducing reliance on existing exemption notices.
• Stablecoins: Introduces a new licensing framework for Stablecoin Issuers, including redemption on demand within five days, liquidity and capital requirements (at least six months running costs), monthly public disclosures, annual independent audit, and provisions for commodity linked stablecoins and cross border equivalence recognition.
• Tokenised securities and funds: Confirms tokenised securities fall under the Protection of Investors Law rather than the LCF Law, and clarifies that registered or authorised collective investment schemes may be tokenised on a public blockchain provided existing fund rules continue to be met.
• Custody: Proposes allowing custodians already licensed under the PoI Law to custody non security digital assets without needing an additional licence.
• Insurance and banking: Provides guidance supporting use of blockchain technology in insurance contracts (including Insurance Linked Securities) and discusses digital finance implications for the banking sector.
• AML/CFT technology and legal certainty: Explores how technology can enhance anti-financial crime compliance and addresses legal certainty issues for digital asset transactions.

The Commission is inviting feedback from firms already regulated in the Bailiwick and from prospective digital finance businesses considering Guernsey. Responses can be submitted via the Engagement Hub, by email, or through direct discussion with the Commission, with a stated deadline for comments.

Key obligations

• Interested parties must submit consultation responses by 6 March 2026 via the GFSC Engagement Hub, by email to dfi@gfsc.gg, or by arranging a discussion with the Commission.
• If the stablecoin proposals are adopted, Licensed Stablecoin Issuers would be required to redeem stablecoins within five days of a holder's request.
• If adopted, Licensed Stablecoin Issuers would need to issue monthly public disclosures of the number of stablecoins issued and the value and composition of safeguarded assets.
• If adopted, Licensed Stablecoin Issuers would need at least one independent audit per year of safeguarded assets plus a monthly attestation of disclosure accuracy.
• If adopted, Licensed Stablecoin Issuers would need to hold capital equal to at least six months' running costs, readily available and unencumbered, to allow an orderly wind down.

Applies to

Virtual Asset Service Providers (VASPs), Stablecoin issuers, Collective investment schemes / fund administrators, Custodians licensed under the Protection of Investors Law, Insurers, Banks, Firms licensed under the Lending, Credit and Finance Law

Deadlines

• 6 March 2026: Deadline for responses to the Consultation Paper