Tokenisation of real world assets (RWAs) Guidance Note

Summary

This JFSC guidance note sets out the regulatory framework and application/consent process for issuing tokenised real world assets (RWAs) in Jersey, such as tokenised equities, bonds, fund units, commodities and stablecoins. It applies a substance over form approach, meaning issuers must also comply with any other Jersey regulatory regime relevant to the underlying asset (e.g. funds regulation). It does not cover the issuance of new virtual assets (ICOs/ITOs), which are addressed separately, though tokenisation of an existing virtual asset falls within scope.

• Corporate structure: Issuer must be a Jersey company or Jersey LLC, administered by a JFSC-licensed trust company service provider (TCSP), with a Jersey-resident director on its governing body who is a principal person of that TCB.
• Consent: Issuer must obtain Control of Borrowing (Jersey) Order 1958 (COBO) consent from the JFSC before undertaking the token issuance.
• AML/CFT/CPF: Full AML/CFT/CPF requirements, including enhanced measures for higher-risk purchasers/sellers, plus documented policies, procedures and controls covering CDD, transaction monitoring, screening, suspicious activity reporting and record keeping.
• Technology and disclosure: Annual audit of all smart contracts deployed with public results; independent verification of underlying assets by a qualified third party; clear, fair, not misleading marketing material including an information memorandum/white paper meeting prospectus-content standards.
• Ongoing custody and disclosure: Underlying assets held by a professional custodian in an equivalent jurisdiction, ring-fenced and not lent for yield (absent JFSC agreement), with public disclosure of token/NAV performance, wind-down arrangements, distribution mechanics and token-holder rights.
• Governance oversight: No change of TCB, Jersey-resident director or specified counterparties without prior JFSC approval; TCB must continually assess the issuer's integrity, resources, governance, security, financial crime controls, marketing strategy and wind-down resilience.
• Stablecoins: Additional information required on collateral assets and liquidity, custody arrangements, direct sale/redemption counterparties (e.g. authorised participants) and any de minimis issuance/redemption thresholds.
• Reporting: Governing body must promptly notify the JFSC of any default on issued tokens or inability to redeem tokens within a reasonable period.

The JFSC indicates an aim to respond to lower-risk applications within five business days where a complete checklist and draft information memorandum are submitted, but reserves the right to reject premature applications. The guidance will be reviewed and updated periodically.

Key obligations

• Incorporate as a Jersey company or Jersey LLC and be administered by a JFSC-licensed TCSP carrying on trust company business
• Appoint and maintain a Jersey-resident director, who is a principal person of the appointed TCB, on the issuer's governing body
• Obtain COBO consent from the JFSC before undertaking any token issuance
• Apply full AML/CFT/CPF measures to token purchasers and sellers, including enhanced measures for higher-risk cases, and develop, implement and monitor related policies, procedures and controls
• Arrange for all smart contracts deployed in the year to be audited and publish the results
• Independently verify underlying assets via a qualified third party and publish the results within three months of the issuer's financial year end, and annually confirm 100% collateralisation and ring-fencing
• Submit an information memorandum (or white paper) to the JFSC meeting prospectus-equivalent content requirements, and ensure all marketing material is clear, fair and not misleading
• Hold underlying RWAs with a professional custodian accountable in an equivalent jurisdiction, ring-fenced and not lent out for yield unless the JFSC expressly agrees
• Publicly disclose token performance against NAV, wind-down arrangements, distribution allocation mechanics and any additional or reduced token holder rights
• Obtain prior JFSC approval before any change of TCB, Jersey-resident director or specified counterparties
• Promptly notify the JFSC of any default on issued tokens or inability to redeem tokens within a reasonable period
• For stablecoin issuers, provide details of collateral assets, liquidity, custody arrangements, sale/redemption counterparties and any de minimis issuance or redemption thresholds

Applies to

issuers of tokenised real world assets, trust company service providers (TCSPs), stablecoin issuers, Jersey companies and Jersey limited liability companies

Deadlines

• within three months of the end of the issuer's financial year end: Publish independent verification results of underlying assets
• annually: Underlying assets must be independently verified by a qualified third party, confirming 100% collateralisation and ring-fencing
• within five business days: JFSC's indicative service level target for responding to lower-risk tokenisation applications meeting stated criteria