FINx follow up: Tokenisation questions answered

What did Jersey’s tokenisation audience still want to know after Jersey Finance's #FINx2025? Senior counsel Sarah Townsend re-grouped with fellow panellists to work through the questions they didn't have time to address during the event, focusing on the practical issues that matter most to managers, innovators and investors. 

Her responses touch on themes such as balancing the need to remain competitive in a global market, whilst ensuring we continue to meet international standards and protect investors.

Read her input below to learn more about how tokenisation is developing in Jersey and how the Island is positioning itself in a competitive global market.

Jersey’s sweet spot is non-retail, closed-ended real estate and PE funds. Given their holding periods, what is the benefit of tokenisation over a JPF structure?

By issuing virtual tokens that give exposure to traditional and alternative assets, these assets are being made available to the holders of the US$250 billion plus of stablecoin without the need to off ramp (to exchange their stablecoin for Fiat currency) before investing in a traditional fund structure. There may also be fewer service providers required and easier access to these products via exchanges. Token holders could also post their tokens as collateral to borrow against using DeFi protocols.

What does the long and short term look like for digital assets (DA) and tokenisation regulations? Where will we land in comparison to the UK and similar jurisdictions?

We are not aware that there are any plans for this. In our view it is helpful to have a Jersey TCB director on the board of the issuer as this makes it easier to ensure the issuer is operated in line with good corporate governance standards and Jersey’s legal and regulatory framework. In turn, this helps to maintain Jersey’s excellent international reputation for meeting high regulatory standards.

One of the big opportunities now is DeFi, what steps does Jersey need to take to enable regulated businesses to take advantage of these opportunities?

The digital assets industry is viewed as a key sector for ‘Jersey PLC’. The Government is further mapping out its risk appetite as regards digital assets, including DeFi. As this process advances further, the JFSC should be encouraged to provide industry with further guidance as to best practices for managing risks in relation to DeFi.

Jersey VASPs are only regulated under AML rules - for investor confidence, should VASPS not be brought into full regulation as per TradFin?

VASPs are regulated in Jersey in accordance with international standards (such as FATF requirements). In my view, we would need to consider the case for increasing the level of regulation very carefully – it’s a balancing act and we need to be mindful that Jersey is operating in a globally competitive market.

How are we to monitor changes in the party holding the token?

Under the JFSC guidance, the issuer is required to apply ‘all relevant AML/CFT/CPF requirements’. The JFSC guidance requires AML checks to be carried out on the issuance of the token and again on redemption of the token. There is no requirement to carry out AML checks each time the token is transferred to a new token holder on the secondary market. An issuer can refuse to redeem a token if AML checks are not satisfactory. Aside from this, the issuer will be subject to Jersey’s sanctions regime (for example) and will need to ensure that it has appropriate policies and procedures in place, including using blockchain analytics tools where appropriate.

How can we change our mindset to keep up with competitors like Dubai, Hong Kong and Cayman who are moving faster?

Jersey has moved quickly in this space. Whilst, in some cases, other jurisdictions may be moving faster and making changes more quickly, we also have to balance this against the need to provide entrepreneurs and investors with confidence in the jurisdiction they choose – is there sufficient certainty or does it keep changing too much? How stable is the government? What is the reputation of the jurisdiction in terms of it meeting international regulatory standards? Different entrepreneurs / investors will place a different weighting on these factors – it’s not a one-size-fits-all.

Jersey only has a small number of registered Virtual Asset Service Providers (VASPs). What efforts are being made by Jersey Finance to attract more VASPs to Jersey?

There are 14 Jersey VASPs as of October 2025, and by comparison there are around 19 Cayman VASPs as of July 2025. Jersey Finance has been actively promoting Jersey for digital assets in the UK, Switzerland, Middle East, Asia and the US. We are receiving a number of enquiries from VASPs looking to relocate from other jurisdictions (sometimes where there is a heavier regulatory framework in place), which indicates that Jersey is an attractive option.

Managers like the concept of tokenisation as it opens up their investor base to the retail market. How does that fit in with Jersey PLCs appetite?

It is possible to design tokenisation structures which allow retail investors to get exposure under the existing framework. Of course, appropriate risk warnings and disclosures have to be included in the offer documentation or whitepaper, as would be the case for other investment vehicles. Jersey has a risk-based approach and so, just as is the case for other structures, corporate service providers and the JFSC will consider on a case-by-case basis.

What are the benefits or limitations of tokenisation in relation to liquidation of assets?

The JFSC’s guidance relating to the tokenisation of real world assets states that all tokens have to be 100% collateralised and ring fenced. This is designed to protect token holders in a liquidation scenario. Additional safeguards can be built into the documentation /structure, for example, there is usually appropriate non-petition and limited recourse wording and it may well be the case that a service provider is appointed prior to any tokens being issued whose role is to represent token holders’ interests and automatically step in to realise assets in a liquidation scenario.

Will Jersey’s focus be on more niche structures and asset classes like wine because we’ve lost market share to Luxembourg for institutional co-mingled funds?

We’ve advised on a number of RWA tokenisation applications and have seen the launch of a range of different products relating to various underlying asset classes – ranging from tokenised wine to Tradfi products. Jersey has clear guidance in place and we can provide a demonstrable track record – Jersey has a lot of advantages which we can offer digital asset entrepreneurs, regardless of what they want to tokenise. RWA on chain value is growing rapidly – it has more than doubled since President Trump’s inauguration – and the tokenised fund market will grow as well. Jersey is a well-regarded international finance centre and is increasingly seen as a significant digital assets hub – there’s no reason why Jersey can’t attract a sizeable market share across a range of underlying asset classes.

What is the benefit of tokenising a listed traditional equity when it’s already liquid?

One benefit of tokenising liquid assets, like listed shares, is that you are making that asset available to those who hold the US$250 billion plus of stablecoin, who can acquire those tokens without having to first exchange their USDC/USDT for Fiat currency. Another is that the tokens can be posted as collateral to borrow against from DeFi protocols; and the tokens can be self-custodied by the investor in their wallet rather than being held by a third party in a brokerage account.

How does Jersey's regulatory regime compare to those of competing jurisdictions, and which investors will benefit from investing through Jersey?

Jersey has a more rigorous regime than jurisdictions such as BVI and Cayman, where the registry is not necessarily even informed whether a company is issuing tokens or not, and these vehicles can be formed immediately with no regulatory oversight. Rather, in Jersey, there is a JFSC application and approval process, and a consent is issued by the JFSC, offering regulatory certainty to the issuer and the investors; and a degree of investor protection. Jersey has a lighter touch regime than, for example, Bermuda where a prudential licence may be required, so Jersey sits in the middle with some of its competitor jurisdictions in terms of the level of applicable regulation. Jersey’s regime will need to continue to be benchmarked against developments in other jurisdictions so that it continues to evolve and remain competitive but this is something which the regulator and Jersey’s Government is investing resources into – and is seen as a key sector for the future.

To hear from the other panellists and explore the full discussion, read the complete Q&A on Jersey Finance.