Guernsey funds legal and regulatory update

An overview of Guernsey legislative and regulatory developments relevant to investment funds for the period 4 December 2025 to 5 March 2026.

1.  Guernsey’s Finance Sector Growth Strategy 2035

The States of Guernsey has published Guernsey’s Finance Sector Growth Strategy 2035 (Strategy), a long-term framework to support sustainable growth and diversification of Guernsey’s finance sector over the next decade, identifying priority opportunities and targeted, actionable initiatives.

Developed in collaboration with the Guernsey Financial Services Commission (Commission), Guernsey Finance and the Guernsey International Business Association, the Strategy reflects extensive industry input and emphasises coordinated delivery by government, the regulator and industry to maintain competitiveness.

From an investment funds perspective, key priorities in the Strategy include:

• diversifying asset class exposure: expanding beyond private equity and venture capital into private debt and infrastructure, which the Strategy identifies as fast-growing areas of global alternatives
• emerging asset classes: promoting capability in defence and infrastructure, supported by Guernsey’s expertise with SPVs, PCCs and ICCs, a mature closed-ended regime and a regulated exchange suited to listing infrastructure, defence and technology companies
• tokenisation readiness: promoting Guernsey as a supportive jurisdiction for tokenised securities and assets through its Digital Finance Initiative (below), new licensing for Virtual Asset Service Providers (VASP) and a regulatory approach that encourages innovation while maintaining strong oversight. The Strategy aims to further build on local expertise by enhancing regulatory clarity, expanding Sandbox opportunities and exploring support for tokenisation and stablecoin pilot projects
• advance strategically up the value chain in investment funds sector: attracting on-island fund managers, including first time managers, supported by Guernsey’s fast, flexible funds regime and established administration ecosystem, and
• digitalisation and AI: accelerating adoption of digital tools and safe AI experimentation to reduce manual or semi-manual processes, building on existing automation and the Digital Finance Initiative and positioning Guernsey as a testbed for emerging technologies.

The Strategy highlights Guernsey’s comparative cost advantage as an international financial centre, combining high regulatory standards with streamlined, proportionate regulatory and administrative processes, including fast-track fund options such as the Private Investment Fund, and notes that, as a third country operating outside the EU, Guernsey-domiciled structures are not subject to the full scope of EU legislation where pan-EU access is not required.

2.  Digital Finance: Consultation

As part of its broader Digital Finance Initiative, the Commission has issued a consultation paper titled Supporting Growth with Digital Finance (Consultation).

The Consultation aims to encourage innovation and the growth of digital finance in Guernsey, while safeguarding investor protection and financial integrity. It sets out practical proposals to update Guernsey’s regulatory framework in key areas, including:

• tokenisation of funds: permitting the use of a public blockchain as the register of fund unitholders in a Guernsey collective investment scheme, subject to meeting applicable fund rules (currently only private blockchain is permitted)
• digital asset custody: clarification of the regulatory treatment of digital asset custody, including amendments allowing custodians already licensed under the Protection of Investors (Bailiwick of Guernsey) Law, 2020 (POI Law) to hold non-security digital assets without additional licensing
• stablecoins: the introduction of a dedicated framework for privately issued stablecoins, issued by persons licensed by the Commission as a ‘Financial Firm Business’ (Part III) under the Lending, Credit and Finance (Bailiwick of Guernsey) Law, 2022 (LCF Law)
• tokenised securities: clarification that non-fund tokenised securities are treated as any other Category 2 controlled investment (general securities and derivatives) under the POI Law and not as virtual assets under the LCF Law
• blockchain in insurance: supporting blockchain-based insurance contracts
• VASP regime: the removal of the blanket restriction on VASPs offering services to retail customers, and
• financial crime controls: enhancing anti-financial crime compliance through technology.

Responses to the Consultation can be made via the Commission’s Engagement Hub, by email or in person by 6 March 2026.

3.  Innovation Sandbox with Concierge Support

The proposals in the above Consultation complement the Commission’s Innovation Sandbox + Concierge service, which was launched in October as part of its Digital Finance Initiative.

The Sandbox offers a controlled environment for firms to develop and test innovative products and services, such as blockchain, tokenisation and AI-driven solutions under tailored licensing conditions.

Access to the Sandbox is via a tailored pathway for firms developing novel financial products, beginning with a Concierge Connect Form. Each participant receives a dedicated regulatory contact and support throughout the process, with ongoing guidance provided via the Commission’s Online Portal.

4.  Guernsey’s first Natural Capital Fund

The Commission has registered its first Natural Capital Fund, marking a significant milestone in Guernsey’s sustainable finance strategy. The new fund will invest in large-scale habitat creation and ecological restoration projects known as ‘habitat banks’ which support compliance with England’s 2024 biodiversity net gain regulations – an emerging natural capital asset class that enables biodiversity to be restored at scale.

Introduced as part of Guernsey’s sustainable funds framework, the Natural Capital Fund regime provides a regulated designation for funds that positively contribute to nature or substantially reduce environmental harm, complementing the established Guernsey Green Fund designation.

5.  Sustainability: Code of Corporate Governance and Anti-Greenwashing Guidance

The Commission has published its feedback statement (Statement) following a consultation on sustainability practices in Guernsey’s financial sector.

The Statement sets out amendments to the Finance Sector Code of Corporate Governance, effective from 1 February 2026. These changes expand board responsibilities beyond climate-related risks to include broader environmental sustainability risks, such as biodiversity. Boards must consider these risks to determine materiality and reassess periodically as business models and external factors evolve.

The amendments aim to ensure informed decision-making and strengthen Guernsey’s reputation as a responsible international financial centre.

The Statement also confirms the introduction of new Anti-Greenwashing Guidance (Guidance), also effective from 1 February 2026. The Guidance reinforces existing obligations under the Minimum Criteria for Licensing, making clear that sustainability claims must be fair, clear and not misleading.

The Guidance demonstrates the Commission’s commitment to tackling greenwashing while avoiding unnecessary burdens for well-managed firms.

6.  Investment Statistics: Quarter 3 2025

Investment statistics for Quarter 3 of 2025 have been published by the Commission and are available here. Notably, the total net asset value of Guernsey funds at the end of the quarter was £272.8 billion, an increase over the quarter of £1.9 billion (+0.7%).