Tokenised real-world assets

What is a tokenised real-world asset?

Tokenisation is the process of creating a digital representation of an existing asset, usually using blockchain or distributed ledger technology.  A tokenised real-world asset may represent a security, bond, commodity, currency, unit in a fund or another physical, financial or intangible asset.

Is this pathway right for you?

This pathway may apply if you are considering using a Jersey entity to issue a token representing or replicating an existing asset.

You do not need to have established the Jersey issuer before using this page. The requirements below explain the type of Jersey entity, administration and regulatory arrangements that will be needed.

Examples may include tokenised:

• shares or debt securities
• units or interests in a fund
• commodities or currencies
• real estate or other physical assets
• stablecoins fully collateralised by cash or cash equivalents
• contractual rights, intellectual property or other intangible assets

This list is illustrative and not exhaustive. Whether the guidance applies will depend on the substance of the arrangement, including the underlying asset, the rights attached to the token and how those rights are issued, transferred and exercised.

If you intend to launch a newly created coin or token rather than tokenise an existing asset, the initial coin or token offering pathway may be a better starting point.

Where units or interests in a fund are tokenised, the applicable Jersey funds regime continues to apply in addition to the tokenised real-world assets guidance. Tokenisation does not replace or disapply the ordinary requirements applying to the fund, its operator or its service providers.

How are tokenised assets regulated?

We assess each proposal on a case-by-case basis and apply a substance-over-form approach. The treatment of a tokenised share, bond or fund unit will depend on the underlying asset, the rights attached to the token and the activities being carried on.

A consent is required under the Control of Borrowing (Jersey) Order 1958. Other Jersey regulatory laws may also apply, including the financial services, collective investment funds, prospectus and AML/CFT/CPF frameworks.

Where a financial instrument or fund interest is tokenised, the regulatory treatment of the underlying asset continues to apply alongside the tokenisation requirements.

What will you need?

If you decide to proceed using Jersey, the current tokenised real-world asset guidance sets out the issuer, administration and governance arrangements required. The current guidance requires the issuer to be a Jersey company or Jersey limited liability company and to be administered by a JFSC-licensed trust company business. It must also appoint and maintain an appropriate Jersey-resident director.

Find out more about how to incorporate a Jersey company. 

The application is expected to address:

1. The asset being tokenised and the rights represented by the token
2. Whether those rights differ from direct ownership of the underlying asset
3. The legal and regulatory analysis of the structure
4. The blockchain, token standard and smart contracts being used
5. The custody, ring-fencing and independent verification of underlying assets
6. Issuance, distribution, transfer, trading and redemption arrangements
7. The target market and relevant investor protections
8. AML/CFT/CPF controls, transaction monitoring and sanctions screening
9. Governance, counterparties, conflicts and wind-down arrangements
10. An information memorandum or white paper
11. Clear, fair and not misleading marketing and risk disclosures

Smart contracts deployed during the year must be independently audited and underlying assets must be independently verified in accordance with the guidance.

Where the asset being tokenised is a fund interest, the application must also address the applicable fund requirements, including the legal status of the fund interest, the ownership register, transfer restrictions and the rights of investors.

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. Such preliminary discussions can be particularly helpful where there are novel features or exposure under the Sound Business Policy.

The guidance requires the issuer to be administered by a JFSC-licensed trust company business, so you should engage a suitably experienced Jersey provider at an early stage. Many applicants also find it useful to engage a Jersey law firm or other appropriately experienced local adviser to support the application process.

Your submission will need to include:

1. The tokenised RWA application checklist
2. The draft information memorandum or white paper
3. The legal and regulatory analysis
4. Supporting information on the issuer, underlying assets, technology, custody, counterparties, controls and proposed offering
5. Any additional application required under the Jersey funds, financial services or other applicable regulatory framework

Draft applications may be accepted where any remaining omissions do not materially affect the substance of the application. Further information may be requested where we need to understand the legal effect of the token, its relationship with the underlying asset or the risks presented by the structure.

Timescales and fees

For a complete, lower-risk application involving traditional financial instruments, we aim to provide an initial response within five business days. This is an initial response target and not an approval deadline.

The overall time required will depend on the structure, risks and completeness of the submission, including the required application and any separate fund, registry or other regulatory applications.

Refer to the relevant fee schedules for applicable fees.

Professional adviser, administrator, custody, audit and technology costs are separate from JFSC fees.

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