Guernsey Accelerates its Digital Finance Proposition

Guernsey’s digital finance proposition continues to gather momentum. Over the past year, the Guernsey Financial Services Commission (Commission) has progressed its Digital Finance Initiative from industry engagement and consultation to practical implementation, with measures designed to provide clearer routes to market and support well-governed digital finance businesses.

In July 2026, the Commission published both its response (Response) to the consultation on Supporting Growth with Digital Finance (Consultation) and new guidance on the Tokenisation of Investments and Other Assets in the Bailiwick of Guernsey (Guidance). Together, these initiatives send a clear message: Guernsey is embracing technological innovation while maintaining the robust regulatory standards for which the jurisdiction is internationally recognised.

Importantly, the Commission’s approach builds on Guernsey’s existing legal and regulatory framework rather than creating an entirely new regime, providing businesses with greater certainty when developing innovative products and services.

The Commission has since taken a further step towards implementing the outcome of the Consultation by making the Lending, Credit and Finance (Amendment) Rules, 2026 (Amendment Rules). The Amendment Rules, which come into force on 1 October 2026, remove certain restrictions and requirements applying to virtual asset service provider (VASP) activity, giving regulated firms greater flexibility to develop digital finance services.

A practical and forward-looking approach

The Consultation attracted strong industry support, with respondents confirming that Guernsey’s existing technology-neutral legal and regulatory framework is already well suited to support innovation in digital finance. The Response focuses on reducing complexity, providing regulatory clarity and creating clearer routes to market for well-governed innovation, while reinforcing Guernsey’s position as a trusted international finance centre.

Among the key developments are:

• new Guidance supporting the tokenisation of investment funds, securities and other assets
• greater clarity regarding the regulatory treatment of tokenised securities and tokenised insurance-linked securities
• confirmation that tokenised fund interests and securities may be issued and recorded using distributed ledger technology (DLT) while remaining within existing regulatory frameworks
• confirmation that public or private DLT may be used for fund tokenisation, subject to appropriate controls
• recognition that smart contracts can support operational efficiency and compliance controls within regulated structures
• more flexible licensing arrangements, including removal of the rule requiring an existing Commission licensee to obtain a separate VASP licence in every case in which it wishes to undertake virtual asset activity
• the removal of the restriction preventing VASP licensees from providing services to retail customers, and
• the removal of the VASP-specific environmental reporting requirement.

Regulatory clarity supporting innovation

A particularly welcome feature of the Guidance is the adoption of a clear ‘same activity, same risk, same regulatory outcome‘ approach. In practice, tokenising an asset does not fundamentally alter the regulatory expectations that apply to it. This offers businesses greater certainty when structuring innovative products while preserving investor protection and market integrity.

The Guidance also provides practical examples of how tokenisation may be used across investment funds, securities and real-world assets, helping promoters and service providers understand how existing frameworks apply to new technologies. It also recognises the potential for smart contracts to support operational processes and compliance controls within regulated structures.

Guernsey’s existing framework for electronic instruments, records, contracts and registers also provides a strong legal foundation for DLT-based ownership models. Registers of fund interests and Guernsey-issued securities may be maintained using public or private DLT, subject to the applicable legal and regulatory requirements.

Supporting practical applications

The Guidance provides greater certainty for businesses considering tokenised funds, securities, insurance-linked securities and other assets. In particular, the Commission has clarified that tokenised insurance-linked securities can be accommodated within the existing regulatory framework without requiring separate VASP licensing.

Open for business

Perhaps the strongest theme emerging from the Commission’s publications is its commitment to being both accessible and pragmatic. The Innovation Sandbox and Concierge provide structured routes for businesses developing novel products, services and business models to engage with the Commission at an early stage.

The Commission has also updated its Handbook on Countering Financial Crime (AML/CFT/CPF) to support the responsible use of technology to enhance the effectiveness and efficiency of anti-financial crime controls.

Looking ahead, the Commission is progressing work on a regulatory framework for stablecoins, with feedback and rules expected by the end of 2026.

Taken together, these developments demonstrate a practical and measured approach: supporting innovation through clearer guidance, proportionate regulatory change and early engagement, without compromising Guernsey’s regulatory standards. By combining a technology-neutral framework with established expertise across investment funds, insurance and corporate services, Guernsey is well placed to support responsibly developed digital finance and tokenisation propositions.

If you would like to discuss how these developments may affect your business or explore new opportunities involving digital assets, tokenisation or other innovative financial structures, please do not hesitate to get in touch with your usual Mourant contact.