virtual assets

Who is caught

Virtual asset activity in the Bailiwick is regulated principally under the Lending, Credit and Finance (Bailiwick of Guernsey) Law, 2022 (the LCF Law). Acting as a virtual asset service provider (VASP) is prohibited without a Part III licence from the Guernsey Financial Services Commission. Persons carrying on virtual asset services or activities from the Bailiwick have needed a licence since 1 July 2023.

• VASPs: Persons acting as a virtual asset service provider must hold a Part III licence under the LCF Law; this sits alongside the separate Part III licence for financial firm business and the Part IV regime for peer to peer and crowdfunding platforms.
• AML/CFT-regulated firms: VASPs are 'specified businesses' under the Handbook on Countering Financial Crime, which applies dedicated virtual asset due diligence, correspondent relationship and transfer requirements (Chapter 18) to firms engaged in virtual asset activity.
• Tokenised arrangements: Under the GFSC guidance on tokenisation, tokenisation does not itself create a new licensing regime; existing obligations continue to apply on a 'same activity, same risk, same regulatory outcome' basis. Native or direct tokenisation of real-world assets (with no intermediary entity) may fall within the LCF Law's VASP framework, and firms are encouraged to engage the Commission to confirm licensing.
• Tokenised securities and funds: Tokens with the features of a Category 2 controlled investment are regulated under the Protection of Investors Law, and tokenised fund interests remain subject to that Law; the tokenisation guidance expressly does not apply to stablecoins.

A 2017 advisory on Initial Coin Offerings is informational only, warning consumers about ICOs rather than imposing requirements on regulated entities.

Sources: Lending, Credit and Finance (Bailiwick of Guernsey) Law, 2022 (Consolidated) · Lending, Credit and Finance Rules and Guidance, 2023 (Consolidated Version) · Feedback on Consultation on Amendments to Schedule 3 re Independent Audit, Business Risk Assessments and VASPs (2023-07-10) · Feedback - Following the Commission's Consultation on the Lending, Credit & Finance Rules, Guidance and Implementation (January 2023) · Handbook on Countering Financial Crime (AML/CFT/CPF) (7 July 2026) · Guidance Note on the Tokenisation of Investments and Other Assets in the Bailiwick of Guernsey (July 2026) · Advisory Notice Regarding Initial Coin Offerings (2017-09-26)

Key duties

VASP licensees are subject to the general licensee obligations under the LCF Law and the Lending, Credit and Finance Rules and Guidance, 2023, plus virtual-asset-specific conduct and AML/CFT duties. The recurring administrative duties are annual (audited accounts, annual review and annual return); AML/CFT obligations apply on an ongoing basis.

Licensing and governance

• Licence: Obtain and maintain a Part III VASP licence; applicants and licensees must supply information the Commission reasonably requires to assess the minimum criteria for licensing in Schedule 4.
• Resident directors: Have at least two individuals responsible for directing the business resident in the Bailiwick.
• Policies and controls: Maintain effective governance policies, procedures and controls, a breaches register, and a written conflicts of interest policy with records.
• Accounts and filings: Prepare audited accounts to UK, US or IFRS standards with an auditor's report, set an accounting period not exceeding 12 months, complete an annual review, and file an annual return and other notifications electronically.
• Records and outsourcing: Keep adequate accounting and other records, retain responsibility for outsourced functions, and (for VASPs) obtain the Commission's prior consent before outsourcing functions outside the Bailiwick.
• Supervised roles: Notify the Commission of holders of approved and vetted supervised roles and of changes, subject to the Commission's power to object.
• Prudential: Hold adequate insurance and maintain minimum financial resources.

Virtual asset conduct

• Customer virtual assets: Safeguard customer virtual assets in accordance with the Rules.
• Environmental declarations: Make the required environmental declarations for VASP licensees.

AML/CFT/CPF

• Travel rule: Collect and transmit specified originator and beneficiary information with virtual asset transfers under Chapter 18 of the Handbook.
• Transaction threshold: Apply customer due diligence to virtual asset transactions where the value exceeds the £1,000 occasional transaction threshold; 'funds' and 'property' include virtual assets.
• Risk-based CDD: Apply CDD, enhanced CDD and ongoing monitoring on a risk-based approach, screen and train employees, keep records, comply with UN, UK and other targeted sanctions, and report suspicion without tipping off.
• Risk assessments: Reflect predicate offences from the National Risk Assessment in the business risk assessment, consider whether an independent audit function is needed, and carry out a distinct proliferation financing business risk assessment (the consultation set a 31 December 2024 deadline for that PF assessment).

VASP licensees must also pay the applicable application and annual fees, which the Commission sets and revises through its periodic fee schedules.

Sources: Lending, Credit and Finance (Bailiwick of Guernsey) Law, 2022 (Consolidated) · Lending, Credit and Finance Rules and Guidance, 2023 (Consolidated Version) · Feedback Paper on Consultation for Fee Rates for 2025 (2024-12-05) · Consultation on proposed amendments to the Handbook on Countering Financial Crime to cover counter proliferation financing (2024-01-12) · Consultation on AML/CFT Obligations upon VASPs and Additional Obligations upon Licensed Trustees and Partners (June 2023) · Feedback on Consultation on Amendments to Schedule 3 re Independent Audit, Business Risk Assessments and VASPs (2023-07-10) · Feedback - Following the Commission's Consultation on the Lending, Credit & Finance Rules, Guidance and Implementation (January 2023) · Handbook on Countering Financial Crime (AML/CFT/CPF) (7 July 2026)

Exemptions and carve-outs

The Commission has disapplied the VASP licensing requirement for defined categories under section 40 of the LCF Law. Several exemptions are conditional on matters such as ancillary purpose, ownership structure or monetary thresholds, so persons must check that their specific circumstances meet all stated conditions.

• Own account activity: Persons investing in, holding or trading virtual assets purely for their own benefit are exempt, but not where they offer virtual asset products or services to others.
• Services to VASPs: Licensees under the fiduciaries, protection of investors, or insurance intermediaries laws providing administration or management services to a licensed or exempt VASP are themselves exempt from needing a VASP licence.
• Collective investment schemes: Authorised or registered collective investment schemes that invest, hold or trade in virtual assets are exempt from the VASP licensing requirement.
• No double licensing: An entity holding a Part III VASP licence is exempt from also needing a financial firm business licence.

In the tokenisation context, the guidance note expressly does not apply to stablecoins. In the platforms context, charity donation platforms fall outside the LCF Law's scope, and firms in run-off at 1 July 2023 could apply individually for a time-limited exemption from licensing.

Sources: Notice of Disapplication of Licensing Requirement (Exemptions) under section 40 of the Lending, Credit and Finance (Bailiwick of Guernsey) Law, 2022 (2023-06-23) · Feedback - Following the Commission's Consultation on the Lending, Credit & Finance Rules, Guidance and Implementation (January 2023) · Guidance Note on the Tokenisation of Investments and Other Assets in the Bailiwick of Guernsey (July 2026)

Enforcement and penalties

The LCF Law creates offences for contraventions, including operating without a required licence, and sets out director liability and jurisdictional provisions. Investigation, prosecution and sanctions are dealt with separately under the Financial Services Business (Enforcement Powers) (Bailiwick of Guernsey) Law, 2020, which is not among the documents indexed here, so specific enforcement penalty amounts for VASP breaches are not set out in these instruments.

For AML/CFT, the Handbook is the Commission's interpretation of Schedule 3 to the Criminal Justice (Proceeds of Crime) (Bailiwick of Guernsey) Law, 1999; Schedule 3 remains the legally enforceable text, and courts may take Handbook non-compliance into account when assessing breaches. Maintaining compliant policies, procedures and controls supports a defence of having 'prevention procedures' against failure-to-prevent offences.

Administrative penalties

• Late payment: Escalating penalties for late fee payment of £125 for the first month, £250 for the second, and £375 for the third and subsequent months.
• Late filing: Escalating penalties for late filing of £125 for the first month, £250 for the second, and £375 for the third and subsequent months.
• Inaccurate filing: Penalties for inaccurate filings, with higher amounts where the error is identified by the Commission rather than self-identified.

Sources: Lending, Credit and Finance (Bailiwick of Guernsey) Law, 2022 (Consolidated) · Feedback Paper on Consultation for Fee Rates for 2025 (2024-12-05) · Handbook on Countering Financial Crime (AML/CFT/CPF) (7 July 2026)