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Open a Cryptocurrency Company in Jersey

Open a Cryptocurrency Company in Jersey

Investors who open a cryptocurrency company in Jersey benefit from a straightforward company formation process, as well as an overall favourable business climate.

A crypto license in Jersey is not in place per se, however, companies in this business field need to register with the main regulating agencies in the country, as detailed below.

Our team offers complete assistance to investors who wish to open a company in Jersey and have specific questions about registration, licensing, and control.

You can find out more details about crypto companies in the territory below and can reach out to us as needed.

Requirements for a crypto license in Jersey

While there is no specific license, companies that deal in virtual currencies need to register with the Jersey Financial Services Commission.

The Commission is also the one to supervise the activities of these exchanges.

In addition to the registration that can be seen as a crypto license in Jersey, companies engaged in this field are also subject to anti-money laundering laws.

For this purpose, virtual currency exchanges need to comply with the laws, regulations, and procedures destined to detect and prevent money laundering and terrorist financing.

 Quick Facts  
  Cryptocurrency seen as legal tender (Yes/No)

No

Local regulatory agency The Jersey Financial Services Commission

Special licenses for those who open a cryptocurrency company in Jersey

Registration with the JFSC
Special licenses for crypto exchanges in Jersey

Minimum liquid assets and minimum paid-up share capital for exchange platforms

Anti-money laundering rules Yes
Special requirements for investors who open a cryptocurrency company in Jersey

Comply with the registration requirements set forth
by the JFSC

Residency requirements
for investors

There are no mandatory residency requirements

Types of companies used by those who open a cryptocurrency company in Jersey Limited liability company
Minimum capital for a cryptocurency company in Jersey None prescribed
Minimum number of shareholders 1
Minimum number of directors 2 minimum Jersey resident directors for a security token exchange
Business license The Investment Business (IB) license
Mandatory requirements for the cryptocurrency company The Code of Practice for Investment Business, as well as the regulatory requirements for security token exchange platforms, AML regulations
Cryptocurrency company taxation Subject to the regular taxation principles, including tax neutrality, as there are no specific laws on
the taxation of digital assets
 Reasons to open a cryptocurrency company in Jersey Easy and fast incorporation
No stringent licensing
Full foreign ownership
Tax neutrality

Jersey authorities have updated relevant legislation to include virtual currencies as early as 2016 when an amendment was introduced in the Proceeds in Crime Law.

For this purpose, the document defined virtual currencies as any currency that digitally represents value, is a unit of account, operates as a medium of exchange and can be digitally exchanged for money in any form. A virtual currency does not include instruments that constitute or store value and that can be used to purchase goods and services under a commercial agreement concluded with the issuer of the instrument.

Virtual currency exchanges are supervised businesses and they are subject to registration with the Jersey Financial Services Commission (JFSC). They also fall under the scope of the Proceeds in Crime Law, concerning the aforementioned provisions for preventing as well as detecting money laundering and terrorist financing.

An exemption is, however, in place for these businesses: the JFSC allows virtual currency exchanges with a turnover below £150,000 per year to benefit from an exemption from registration.

This exemption is designed to allow these businesses to test the virtual currency exchange delivery mechanism in a favourable environment.

The threshold is calculated as the cumulative value of each transaction for purchasing or selling a fiat or virtual currency (in a calendar year, calculated in GBP at the time of the transaction).

Even in the case of exempted virtual currency exchangers, the JFSC has the power to investigate the manner in which these entities comply with the Money Laundering Order and the Anti-Money Laundering/Combating the Financing of Terrorism regulations, as necessary.

The activity related to issuing tokens is regulated by the Sound Business Practice Policy. This means that the issuer is required to implement systems, controls, policies, and procedures.

A token issuer, as part of an ICO in Jersey, is also required to observe other mandatory criteria, among which is to receive the express consent of the Control of Borrowing (Jersey) Order (COBO) before starting the activities for the launch.

A summary of the token’s features, the rationale for the launch, the redemption process, as well as the management of the assets and their security for the token holders need to be clearly outlined before the token launch.

You can find out more about the general requirements for initial coin offerings in Jersey from this article.

Conditions for investors who open a cryptocurrency company in Jersey

As previously stated, there are no present licensing requirements for cryptocurrency companies, thus a crypto license in Jersey is not in place in a specific form.

Investors who open a company in Jersey need to follow a number of steps, starting with reserving a company name, and then preparing the incorporation documents.

In order to open a cryptocurrency company in Jersey, investors will present the incorporation documents to the Jersey Financial Services Commission.

The following company registration fees were in place at the time this article was written:

  • 2-hour company incorporation: £670;
  • 1-day company incorporation: £425;
  • 2-day company incorporation: £305;
  • 3-day company incorporation: £242;
  • 5-day company incorporation: £165.

The tax treatment of cryptocurrency businesses

The following income tax treatment applies for different types of cryptocurrency activities in Jersey, as per the Government regulations:

  1. Mining: not subject to income tax when performed on a small or irregular scale;
  2. Exchanging: liable to income tax if they fall under the trading category (both in the case of incorporated and non-incorporated entities);
  3. Use: the profits and losses of companies engaged in cryptocurrency transactions are to be reflected in the relevant accounts and are subject to tax under the regular income tax principles;
  4. GST treatment: income from mining activities received by GST-registered businesses in Jersey generally falls outside the scope of GST.

Investors who open a cryptocurrency company in Jersey can find out more about the tax treatment of the activities involving cryptocurrencies from our team.

The evolving nature of cryptocurrencies can mean that the regulations, referring to taxation and the present version of a crypto license in Jersey in the form of registration can be subject to change.

If you have any inquiries on this matter, please reach out to our team.

General company formation steps in Jersey

In order to be able to launch an ICO in Jersey, a cryptocurrency company needs to be incorporated as a Jersey company, as this activity cannot be undertaken as another vehicle.

As previously mentioned, Jersey legal entities are subject to registration with the Jersey Financial Services Commission and the applicable fees.

Below, our team highlights the general process for company formation in Jersey:

  1. Choose the business form: the limited company is the type of business form used for a cryptocurrency company in Jersey;
  2. Choose the company name: the name of the new legal entity cannot be the same as one that is already registered, nor too similar to an existing name;
  3. Prepare the documents: these are the company’s constitutive documents, the Articles of Association, and the Memorandum; investors will also decide the shareholding structure, appoint the directors and decide on a registered address in Jersey;
  4. Register the legal entity: once the documentation is complete, the application for registration is submitted to the Jersey Financial Services Commission for the formal registration of the legal entity, which will be confirmed through the issuance of a Business License.

These steps are also observed by those who wish to open a cryptocurrency company in Jersey.

Our team is able to offer guidance and assistance throughout the incorporation steps.

The company’s Memorandum and Articles of Association are drawn up so that they will be tailored to the type of company, as well as its activities in Jersey. For a cryptocurrency company, our team specializing in company formation in Jersey assists investors who wish to adapt the standard form of these documents to include their details and the details and scope of the company.

In addition to the corporate documents, the founders of a crypto company in Jersey will need to provide a certified ID copy and the address of each beneficial owner and company controller.

For the purposes of company formation in Jersey, a beneficial owner is an individual who has a shareholding of 10% or more in the company and a controller is an individual who has control over the company through other means.

Our team is able to offer guidance and assistance throughout the incorporation steps and will help you draw up and prepare the needed documents, as well as give you details about the requirements for certifying the documents.

If you would like to know more about incorporations in the other one of the Channel Islands, you can reach out to our agents who specialize in company formation in Guernsey. Our team is qualified to provide assistance for incorporation as per the Companies Law, which only allows the process to take place via a service provider with a valid fiduciary licence.

Information for cryptocurrency companies hiring employees in Jersey

When the cryptocurrency company hires employees it will need to register to pay Social Security and tax it will also need to submit manpower returns.

Upon registration, the company is automatically registered as an employer to pay Social Security for the employees it has, as well as make deductions from the wages of its employees, according to the Income Tax Instalment Scheme (the ITIS).

Automatic registration as an employer is performed by the authorities when the applicant stipulates that he will be hiring employees when he applies for the Business Licence.

Most commonly, the employee stipulates their currently applicable ITIS rate when they are employed, however, if they do not have this, they will be charged at the default rate which is 22%.

The employer should keep in mind that the ITIS is deducted from the employee’s salary, and it is used by the Jersey authorities to fund infrastructure projects and public services.

Once it hires employees, the company will need to register and file monthly combined employer returns.

The ITIS and the social security contributions are paid separately. The combined Class 1 Social Security Contributions are paid once every 3 months while the ITIS amount deducted from the salary of the employee is paid on a monthly basis.

The rule for social security contributions is different for companies that employ 80 or more people, as these businesses need to pay social security contributions every month.

Employers in Jersey can also choose to pay benefits in kind to their employees. These include vehicles or accommodation, and the employer can either choose to pay the tax on these benefits on behalf of the staff or have the employees pay for the benefits in kind tax themselves. Benefits in kind can be subject to exemptions, however, employers and employees will need to be mindful of their tax calculation method, how they fill in the return for these and how they are required to submit the return for the declared benefits in kind.

Jersey company management and control

Limited companies in Jersey are subject to certain requirements concerning their management and control.

While a cryptocurrency company in Jersey does not fall directly under the scope of the economic substance for companies (as its activities are not explicitly included in the list of relevant sectors), it does need to comply with other requirements.

The company in Jersey needs to have at least one shareholder and one director (who can be the same as the shareholder), and a company secretary.

When there are 2 company directors, one of them can also act as secretary, otherwise, the Company Secretary will be appointed separately.

The director can be a natural or legal person and it should be noted that, although they are subject to limited liability as the name of the corporation suggests, they can still be personally liable for wrongful acts undertaken in their capacity as corporate directors.

The director of a cryptocurrency company in Jersey shall:

  • act in good faith, honestly, and in the best interests of the company;
  • exercise care and diligence, exercise his powers purposefully and in accordance with the Articles of Association;
  • the director shall disclose any conflicting interests and has the duty to appoint a suitable company secretary.

Our team can also give you details about the director’s liabilities.

The company will also need to open a corporate bank account, as a step during the general incorporation process.

Companies in Jersey are required to have Employer’s Liability Insurance when they hire employees. They can also have other insurances to remain protected in case of a claim against them.

We assist investors who open companies in Guernsey irrespective of the industry in which they activate.

Contact us for more information about our services for setting up a business in Jersey.

Investors who open different types of businesses, such as a Jersey trust company, can also reach out to our team for details about incorporation as well as ongoing assistance during this process. The trust company will offer various types of services and will enter into a fiduciary relationship with its clients. Our team can give investors details about the relevant regulatory regime for these types of companies.