FINx Your Questions Answered: Tokenisation

Andrew Evans, JFSC: True, but it’s equally important to recognise that Jersey’s industry can evolve and tokenisation is one way in which this is happening. A fund can be tokenised at different levels e.g. units in the fund, assets in the fund etc. Depending on the specifics, these tokens can be traded in secondary markets which increases access to these funds for a wider investor base. Tokenising a fund could also increase operational efficiency, speed of settlement, valuation and compliance.

Sarah Townsend, Walkers: 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.

Suzanne Howe, IQ-EQ: Tokenisation offers liquidity, fractionalisation and operational efficiency. JPFs are cost effective and flexible, tokenisation enables secondary trading, broader investor access and streamlined administration.

Andrew Evans, JFSC: The Government, regulator and wider relevant participants are currently exploring what Jersey’s DA regulatory framework might look like in the future and this will take time to ensure all relevant views are appropriately considered. There are no precise timelines yet, but we do have the advantage of potentially being more agile than larger jurisdictions. More on that in due course.

Sarah Townsend, Walkers: Jersey is well-placed because we have a clear framework in place. However, as a jurisdiction, we need to monitor and continue to benchmark our regime against developments in other jurisdictions and in relation to technology/the market more generally. This is a fast moving area and so it is difficult to predict exactly how the market and regulation will evolve – the JFSC’s innovations team, Government and industry are working hard to ensure our framework remains proportionate, competitive and well resourced – both in the short term and the longer term.

Andrew Evans, JFSC: There is no current intention to do so. This is because the local TCB provides the regulator with a supervised local touch point that wouldn’t otherwise be available for the businesses that structure around Jersey.

Sarah Townsend, Walkers: 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.

Suzanne Howe, IQ-EQ: The JFSC has shown willingness to adapt its guidance to new technologies (e.g. tokenisation of RWAs). While the language is evolving, the regulator has not signalled that it will drop the requirement for TCB board representation in ICOs. Any change would likely come only after further market maturity and demonstration of robust compliance frameworks without local board involvement. By providing the Jersey TCB director, the corporate service provider is ensuring local governance oversight of the board and the issuer entity, adherence to AML/CFT/CPF compliance and overall investor confidence by having a personally-regulated board member appointed.

Andrew Evans, JFSC: We’re keen to ensure we follow international standards and are monitoring FATF and IOSCO. International standards will evolve and reflect innovation in the market and the JFSC will ensure this is reflected in Jersey’s approach.

Sarah Townsend, Walkers: 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.

Sarah Townsend, Walkers: 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.

Andrew Evans, JFSC: Broadly speaking ID&V is required at the subscription and redemption of tokens, there are no current plans to monitor holders in the secondary market.

Sarah Townsend, Walkers: 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.

Suzanne Howe, IQ-EQ: The JFSC guidance requires the AML checks to be carried out on the issuance of the token (minting) and on the redemption of the token (burning). Further token analytics are also available:

1. Blockchain Transparency

Every token transfer is recorded on the blockchain ledger.
Regulators, fund administrators, tokenisers and custodians can use blockchain explorers or dedicated monitoring tools to track changes in ownership in real time. This provides an immutable audit trail of all transfers.

2. Whitelisting and Permissioned Chains

In regulated environments (like Jersey), tokens are often issued on permissioned blockchains or with whitelisting features. Only approved wallets can hold tokens, so any change in holder must go through KYC/AML checks before being added to the whitelist. This ensures that transfers are compliant and traceable.

3. Regtech and Monitoring Tools

Specialist Regtech platforms can continuously monitor token transfers, flag suspicious activity and generate compliance reports. These tools can integrate with the JFSC’s reporting requirements, making oversight seamless.

Sarah Townsend, Walkers: 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.

Suzanne Howe, IQ-EQ: Jersey has already demonstrated that it can move quickly in embracing tokenisation and digital asset innovation. Our challenge now is to continue that pace while ensuring investor confidence remains high, thanks to the jurisdiction’s hallmark strengths: robust corporate governance, strong regulatory oversight and a proven track record of investor protection.

Andrew Evans, JFSC: We have guidance on the issuance of tokenised real-world assets. We approved a number of very high quality applicants and we are processing a number of applications on this front as well.

Elliot Refson, Jersey Finance: I fell into my current role to help attract hedge fund managers to the island reflective of the original McKinsey report. I continue in this task but over recent years have broadened the target audience to the digital space and continue to engage with VASPs, so we do have an active and ongoing project to do this.

Andrew Evans, JFSC: As of October 2025, there were 14 registered VASPs. For comparison there are 53 crypto-asset service providers (CASPs) registered with the UK FCA and a similar number of MiCA licenses have been issued across the EU (39 CASPs and 14 e-money token issuers).

Sarah Townsend, Walkers: 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.

Suzanne Howe, IQ-EQ: Jersey Finance and the industry are actively working to attract more VASPs by promoting Jersey’s balanced regulatory environment, updating AML/CFT frameworks to align with FATF standards, publishing clear VASP registration lists, and positioning Jersey as a trusted jurisdiction for institutional-grade digital assets.

Summary of efforts Jersey Finance and industry are making to attract VASPs:

1. Promoting Jersey’s balanced regulatory framework
Jersey Finance highlights that Jersey offers a progressive but pragmatic approach to digital assets, encouraging innovation while avoiding a “crypto free-for-all.”

This messaging is designed to reassure institutional investors and VASPs that Jersey combines speed with strong governance.

2. Strengthening AML/CFT compliance
Jersey has extended its AML/CFT/CPF regime to cover all VASP activities, aligning with FATF recommendations.

This ensures that VASPs operating in Jersey meet international standards, which is attractive to firms seeking credibility and global recognition.

3. Transparency through VASP listings
The JFSC now publishes a list of registered VASPs on its website, similar to other regulated entities. This transparency signals to the market that Jersey is serious about oversight while also making it easier for investors and counterparties to verify regulated VASPs.

4. Positioning Jersey as a trusted digital asset hub
Jersey Finance markets the Island as a jurisdiction where tokenisation, digital asset funds and VASP activity can thrive under strong governance. The emphasis is on institutional-grade projects — appealing to fund managers, custodians and exchanges who want innovation without reputational risk.

Sarah Townsend, Walkers: 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.

Suzanne Howe, IQ-EQ: Jersey has moved quickly to embrace tokenisation, demonstrating its ability to adapt and innovate. At the same time, we recognise that investor confidence in the jurisdiction depends on maintaining strong controls and corporate governance. Our focus is on moving at pace, but always with the assurance that Jersey’s reputation for trust, compliance and investor protection remains intact. Opportunities to broaden investor access — including potential retail participation — will be reviewed on a case by case basis, ensuring that each initiative meets Jersey’s high standards of governance and suitability. This combination of agility and discipline is what sets Jersey apart from other jurisdictions.

Sarah Townsend, Walkers: 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.

Suzanne Howe, IQ-EQ: Liquidation is one of the areas where tokenisation can both unlock new efficiencies and introduce challenges. Tokenisation can make liquidation faster and more transparent but in Jersey it must be 100% collateralised, ring-fenced and overseen by a regulated CSP. This shows a progressive but disciplined risk appetite: innovation is welcomed, but only under strong governance. In liquidation scenarios, these controls ensure that Jersey maintains its reputation for trust, compliance and investor protection.

Elliot Refson, Jersey Finance: Jersey has lost market share to Luxembourg for institutional co-mingled funds but is winning the downstream business (topco, midco, carry, funds of one etc.) as witnessed by the over 100% growth of JPFs and corporate vehicles over recent years. A subset of this is the funds of one and co-mingled funds which is in part being driven by the HNW and family office market. It is that market that will determine structuring for tokenisation and which is the future of the industry.

Additionally, Jersey has advantages over Luxembourg and certain other jurisdictions which include:
• Jersey issuers do not need to register as a VASP / no need for any prudential licence
• There are no regulatory capital requirements
• The tokens can be held by investors directly and “self-custodied”, which is not possible in Luxembourg where a “control agent” needs to hold the tokens on behalf of the underlying investors
• The tokens can be bearer instruments and freely transferred on the blockchain without the need for CDD on secondary transfers unlike in certain other jurisdictions
• The products can be sold to ‘retail’ investors subject to appropriate disclosures and compliance with local marketing rules

Our target market for tokenisation is the institutional tokenisation market.

Sarah Townsend, Walkers: 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.

Suzanne Howe, IQ-EQ: We are currently experiencing a significant increase in enquiries across the full spectrum of tokenisation opportunities, which demonstrates that interest in Jersey extends well beyond niche areas such as wine or collectibles. Managers and investors are engaging with us on mainstream asset classes like private equity, real estate, infrastructure and debt, alongside more innovative structures. This breadth of demand highlights Jersey’s ability to move quickly in adapting its frameworks to support a wide range of products, while maintaining the strong governance and regulatory oversight that underpin investor confidence in the jurisdiction.

It is important to emphasise that Jersey’s positioning is not limited to boutique or specialist offerings. The high volume of enquiries we are receiving reflects a broad appetite for tokenisation across traditional and alternative asset classes, reinforcing Jersey’s reputation as a trusted jurisdiction for institutional-grade innovation. By combining agility with robust controls, Jersey is able to accommodate diverse product types and investor bases, ensuring that our competitive edge lies in both the scale of opportunities we can support and the confidence we inspire through disciplined oversight.

Andrew Evans, JFSC: There are many advantages such as 24/7 trading, global accessibility (i.e. not everyone has access to US / UK equities), tokenised equities can be used as collateral in DeFi protocols to borrow against.

Sarah Townsend, Walkers: 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.

Suzanne Howe, IQ-EQ: Tokenising a listed equity that already trades on a liquid exchange may not be about creating more liquidity but rather about unlocking new efficiencies and expanding access. Through tokenisation, shares can be fractionalised, enabling smaller ticket sizes and opening participation to a wider investor base. It also allows equities to be integrated into blockchain ecosystems, where settlement can occur almost instantly and corporate actions such as dividends or voting can be automated via smart contracts, reducing administrative overheads and counterparty risk. The real benefit lies in extending the utility of traditional equities beyond the exchange. Tokenised shares can trade globally on a 24/7 basis, and be bundled into tokenised funds, creating new channels for capital formation and investor engagement. Even where liquidity already exists, tokenisation adds programmability, efficiency, and broader accessibility, positioning Jersey to support innovation while maintaining strong governance and investor confidence.

Andrew Evans, JFSC: It’s a difficult question to answer as what some might see as a benefit might be a drawback for others. I would say that Jersey’s fundamental attractions remain true in the DA space; stability, predictability, tax neutrality, high focus on financial crime, etc. and entities / investors valuing our fundamentals would probably be pleasantly surprised by our digital assets options here.

Sarah Townsend, Walkers: 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.

Suzanne Howe, IQ-EQ: Jersey’s regulatory regime is deliberately positioned as progressive but disciplined, in contrast to some competing jurisdictions that prioritise speed or scale. While places like Dubai, Hong Kong and Cayman have moved quickly to attract virtual asset service providers and tokenised funds, Jersey differentiates itself by combining agility with robust corporate governance, 100% collateralisation requirements, ring fencing of assets and oversight by regulated corporate service providers. This approach ensures that innovation in tokenisation and digital assets is matched by investor protection, AML/CFT compliance and transparency, which are central to Jersey’s reputation as a trusted fund domicile.

The investors who benefit most from Jersey’s regime are those seeking institutional grade opportunities with confidence in governance and regulatory oversight. Institutional investors, family offices, and sophisticated high-net worth individuals value Jersey’s balance of innovation and control, as it provides access to tokenised structures and niche asset classes without compromising on security or compliance. Retail access may be considered but only on a case by case basis, ensuring suitability and investor protection. In short, Jersey appeals to investors who want exposure to tokenisation and alternative structures but within a jurisdiction that prioritises trust, credibility and long term sustainability over short term speed.