- Virteffic Limited
- |6/9/25
RWA Tokenisation
How Switzerland and Jersey can work together to combine TradFi and DeFi
23 June 2025
No withholding tax in Jersey
A Jersey issuer will not be subject to withholding tax
The Tokenisation can be achieved under Swiss Law
The Swiss DLT Act has been drafted using securities law as its starting point. Jersey adopts a similar approach in its regulation of this area, treating a token issuer as an issuer of securities (in a similar way to a traditional note or debt securities issuer). As such, the Swiss and Jersey legal and regulatory frameworks can be used together, with Swiss law being used in relation to the Tokenisation, and the Jersey based Issuer being subject to Jersey legal and regulatory requirements
Expertise of service providers
“Swiss Crypto Valley” expertise means that law firms and other service providers in Switzerland have the skills and experience in this area. Swiss law firms can work with Jersey law firms, with the Swiss firms providing the “onshore” or lead counsel expertise, linking in with Jersey law firms to ensure that the structure and documentation meets Jersey regulatory requirements. Jersey also has the wider skills and experience of its service providers to support token issuers
Euro-time zone
There is only one hour difference between Switzerland and Jersey, which is particularly helpful when the various parties are working on the documentation and applications to secure regulatory.
A tried and tested approach… but what does the structure look like?
The Issuer:
A Jersey corporate vehicle (the “Issuer”) is incorporated to issue the RWA tokens (the “Tokens”).
The Tokeniser:
A separate tokeniser can be established or appointed, if required, and this entity can be based in Switzerland, Jersey or elsewhere (or the Issuer itself could be the tokeniser).
Governing law of the Tokenisation:
The Tokenisation will be Swiss law governed under the DLT Act.
Regulatory consent required:
The Issuer will apply for positive regulatory approval. The JFSC will grant a consent to issue the Tokens and, where required, consent will also be given to circulate a ‘prospectus’ in Jersey. This means that regulatory approval is obtained in Jersey, which Issuers and investors can find attractive. Jersey’s prospectus rules are relatively “light touch” and have been drafted so as to align with the EU exemptions.
Information memorandum:
The Issuer must prepare and submit to the JFSC an information memorandum (which may be in the form of a white paper) which complies with certain content requirements for a ‘prospectus’ issued by a company under the Companies (Jersey) Law 1991 (as amended). However, the Jersey disclosure requirements are not as detailed as those which apply under EU legislation.
Administrator and other service providers:
A Jersey corporate services provider (a “CSP”) which is appropriately licensed is required to administer the Issuer. Other service providers (which may be based in Switzerland) such as custodians, provide additional support to the Issuer.
Directors:
The Issuer must appoint and maintain a Jersey resident director who is a natural person. This director must also be a director of the CSP.
AML Requirements:
The Issuer must satisfy AML requirements, and have appropriate policies and procedures in place. In particular, investors will be subject to KYC/CDD checks by the Issuer on initial issue of the Tokens, and again on redemption (but not on secondary transfer).
Custodian:
The underlying RWAs must be held by a professional custodian with accountability in an equivalent jurisdiction (such as Switzerland).
Audit:
The Issuer must arrange for the audit of all smart contracts and the results made public. A separate financial auditor may be appointed, but this is not mandated unless a ‘prospectus’ is being issued. In addition, the underlying RWAs must be independently verified by a qualified third party, with the results to be published within three months of the Issuer’s financial year end.
Marketing:
All marketing material (including the prospectus/ information memorandum or white paper) must be clear, fair and not misleading.
Other requirements under the Guidance Note include:
The JFSC may ask for additional information in connection with any application and so applicants should regard the below requirements as non-exhaustive.
Verification requirements in relation to underlying RWAs
The underlying RWAs must be independently verified by an appropriately qualified third party annually, and the results (confirming that the Tokens are 100% collateralised and ringfenced) must be made available to the public.
Disclosure of NAV
Appropriate disclosures must be displayed publicly by the Issuer including the performance of the Token against the value of the underlying RWAs.
Distribution of assets upon cessation of activity
Where the Issuer or custodian ceases business activity, details of how the underlying RWAs will be distributed (or otherwise realised) to the Token holders must be provided (often this information will be included in the information memorandum or white paper).
Distribution of income, dividends or other distributions
Where relevant, details of how any income, dividends or other distributions will be allocated to the Token holders should be provided, for example setting out whether the mechanism is a smart contract or manual transfer to those wallets holding the Token.
No lending without regulator consent
The underlying RWAs must be 100% collateralised and ring-fenced and not lent out for additional yield unless expressly agreed by the JFSC – acceptable circumstances may include a stablecoin issuer holding liquid cash equivalents.
Rights
Details of any additional rights that the Token holders are granted, for example any voting rights.
Disclosure of risks
A documentation of the key risks and mitigants including considerations around which blockchain the Token is to be issued on and the liquidity of the Tokens in secondary markets. This is usually satisfied by a ‘risk warnings’ section in the information memorandum or white paper.
Change of CSP or specified counterparties
The Issuer must seek prior approval from the JFSC to change the CSP, the Jersey-resident director or other specified counterparties.
Defaults/delays in redemption to be reported to the JFSC
The JFSC must be notified promptly if the Issuer defaults on any Tokens issued, or if the Issuer is unable to redeem Tokens within a reasonable period.
What is required for the Jersey regulatory application?
The JFSC has published an application form or checklist which requires applicants to provide certain information, including:
A description of the features of the Tokens, including details of the proposed issuance and redemption process;
Details of target investor type and investor protections;
A detailed Jersey legal and regulatory analysis – this will include considering: (i) whether the Tokens will require any regulatory licences under the Financial Services (Jersey) Law 1998 (as amended); (ii) the investment fund / AIFMD position; and (iii) whether registration is required under Jersey’s AML legislation; and
The identity of any service providers – the JFSC will wish to satisfy itself as to the identity and credentials of the proposed service providers (including the custodian) and so it is important for the Issuer to have finalised this ahead of filing the application.
The JFSC may also require:
In addition, the Issuer’s information memorandum or white paper will need to be filed with the application and so must be in near final form, together with a memorandum of compliance showing how the required Jersey content requirements have been satisfied.
A beneficial ownership structure chart (and may also ask for an organisational structure chart showing additional information about the Issuer and proposed structure); and
A draft investor warnings and acknowledgement document – depending on the Jersey legal and regulatory analysis, various prescribed form investment warnings may be required to be acknowledged and so the JFSC will usually request sight of the warnings which will be provided to Token holders.
Elliot re-joined Jersey Finance in November 2018 from Crestbridge where he managed their Management Company Services Group.
Elliot’s role is to help define Jersey’s product offering for funds as well as to oversee the strategy and execution of marketing Jersey as both a domicile and destination for Alternative Investment Managers and their funds.
Elliot’s role is to help define Jersey’s product offering for funds as well as to oversee the strategy and execution of marketing Jersey as both a domicile and destination for Alternative Investment Managers and their funds.
