Initial coin or token offerings

What is an initial coin or token offering?

An initial coin or token offering, or IC/TO, is a method of issuing a new virtual asset or token, typically to raise funds or support access to a product, service, network or ecosystem.

This pathway concerns the launch of a newly created coin or token. It is different from representing an existing share, bond, fund unit or other real-world asset as a token. If you are tokenising an existing asset, the tokenised real-world assets pathway may be a better starting point.

Is this the right pathway for you?

Choose this pathway if a Jersey entity intends to:

• create and issue a new coin or token
• raise capital through the sale of a virtual asset
• issue a token providing utility, access, governance or economic rights
• establish a token-based network or business model

The description given to a token is not decisive. We will consider its legal and economic substance, the rights it provides and how it will be issued, marketed, transferred and used.

Which regulatory requirements may apply?

An initial coin or token offering may require a consent under the Control of Borrowing (Jersey) Order 1958, commonly referred to as a COBO consent. Depending on its structure, the issuer and other participants may also fall within Jersey’s financial services, collective investment funds, prospectus, VASP or AML/CFT/CPF requirements.

An issuer, affiliate or service provider involved in exchange, transfer, custody or financial services connected with the offer or sale of the token should separately consider whether it is carrying on VASP activity.

What will you need?

Your submission should clearly address:

1. The issuer, ownership, governance and Jersey presence
2. The purpose of the token and the rights or benefits it gives holders
3. The proposed offer, distribution and fundraising arrangements
4. The technology, blockchain, token standard and smart-contract controls
5. The use of proceeds and funding requirements
6. The target market and jurisdictions in which the token will be offered
7. Token allocation, vesting and any interests held by founders or connected persons
8. Custody, wallet, exchange, transfer and redemption arrangements
9. Financial crime, sanctions, fraud, cyber-security and operational risks
10. Conflicts of interest and arrangements for an orderly wind-down
11. A clear information memorandum or white paper
12. Prominent and proportionate risk disclosures

Marketing material should be clear, fair and not misleading.

 Applicants should not suggest that JFSC consent represents approval of the commercial merits or financial soundness of the token.

Find out more about how to incorporate a Jersey company.

Application process

We welcome requests to discuss informally proposals for a new token issuance. During such discussions it is usually possible to give an indication as to whether the proposal may be acceptable. These preliminary discussions can be particularly helpful where there are novel features or exposure under the Sound Business Policy.

The proposed structure should be sufficiently developed for the JFSC to understand:

• the token and the rights attached to it
• the parties involved
• how potential purchasers or users will find, acquire and use the token
• the flow of funds and virtual assets
• how the token will be issued, distributed and used
• the applicable legal and regulatory analysis

Submit the relevant application and supporting documents through the route specified in the IC/TO guidance. We may request further information or require amendments where the structure, analysis or disclosures are unclear.

Many applicants find it useful to engage an experienced Jersey trust company service provider, Jersey law firm or other appropriately experienced local adviser to support the application process.

Apply here: Special purpose vehicle forms

Timescales and fees

Timescales will depend on the complexity, risk and completeness of the proposal and on whether additional consents, registrations or licences are required. Applicants should allow sufficient time for regulatory review before fixing a launch or token-issuance date.

Refer to the current application materials and fee notices for applicable JFSC, COBO and registry fees. Additional application or annual fees may be payable if another regulatory permission or VASP registration is required.