Isle of Man Regulator Says Bitcoin, Ether Not Considered Securities in New Guidance

The island's Financial Services Authority has set out how it will treat cryptocurrencies and crypto assets and which might be regulated as securities.

AccessTimeIconOct 15, 2020 at 10:32 a.m. UTC
Updated Sep 14, 2021 at 10:09 a.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

The financial watchdog of the Isle of Man, a self-governing British Crown dependency, has clarified how it will treat cryptocurrencies and other tokens, and which might be regulated as securities.

  • Published late last month but announced Thursday, the island's Financial Services Authority (FSA) said the perimeter guidance is aimed at giving companies greater clarity when setting up blockchain-related business in the jurisdiction.
  • Developed in partnership with Digital Isle of Man, an executive agency within the government's enterprise department, the guidance is aimed to be "technology neutral," according to the document.
  • The FSA said the precise treatment will depend on the nature of the token, and the watchdog will consider "substance rather than form."
  • While some cryptocurrencies like bitcoin and ether fall outside its regulatory oversight, companies operating with such assets mustnregister with the FSA as “Designated Businesses” and comply with anti-money laundering and countering the financing of terrorism requirements.
  • Such entities will not require a financial services license.
  • Those carrying out activities with tokens that "have the characteristics of securities or electronic money" will be regulated by the FSA.
  • The guidance suggests that tokens offering profit, income or capital growth would be regulated as security-like investments and would require a financial services license.
  • These tokens would come under the same rules that would apply if the investment were made via other means such as share certificates.
  • Tokens or cryptocurrencies that offer a store of value or access to services and are not a form of e-money would be unregulated.
  • Calling the development a "milestone," Steve Billinghurst, regulatory lead at Digital Isle of Man, said the guidance is likely to evolve further in line with the changing regulatory situation in other major jurisdictions.

Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is an award-winning media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. In November 2023, CoinDesk was acquired by Bullish group, owner of Bullish, a regulated, institutional digital assets exchange. Bullish group is majority owned by Block.one; both groups have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary, and an editorial committee, chaired by a former editor-in-chief of The Wall Street Journal, is being formed to support journalistic integrity.


Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.