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.

Oct 15, 2020 at 10:32 a.m. UTC
Updated Sep 14, 2021 at 10:09 a.m. UTC

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.
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