A Look At The Growth of Tokenisation

As interest in tokenised real-world assets grows, businesses need structures that can accommodate new technology without losing the legal and regulatory certainty associated with traditional financial products.

Real-world assets can range from listed shares and government debt to private credit, wine, gold and real estate. The challenge is therefore not only how to represent these assets digitally, but how to do so within an established structure that provides investors with appropriate regulatory certainty.

Jersey’s existing experience with securitisation provides a framework that can be applied to tokenisation. A Jersey special purpose vehicle (SPV) can hold the underlying real-world assets through a custodian and issue investors with a note using distributed ledger technology.

In practice, the structure operates in much the same way as a traditional securitisation vehicle, with the key difference being that the note is issued as a digital token.

Jersey combines established securitisation expertise with a regulatory framework that can accommodate tokenised products. Businesses developing new structures can engage directly with the Jersey Financial Services Commission (JFSC) and Government to discuss their proposed product, investors and route to launch.

The JFSC provides consent for the issuance of the product without requiring the full prudential licensing process seen in some jurisdictions. This provides regulatory certainty while maintaining a proportionate approval process. Jersey’s tax-neutral environment, including 0% corporate income tax for these structures and no withholding tax, can also support the structuring of these products.