blog.gov.jeTo its supporters cryptocurrency (or virtual assets, aka VAs) is a brave new world, a digital asset that exists across computer networks, outside the control of governments and central authorities, bringing cheaper and faster money transfers for those otherwise excluded from the financial system.
To its detractors it is a bubble waiting to burst, or a boon for transferring criminal assets, or simply such a new and volatile sector that the risks of getting involved outweigh any potential benefits. An analysis of the local situation would therefore be a useful thing to have.
The Virtual Assets Money Laundering & Terrorist Financing National Risk Overview (published 27 May 2022) looks at the current state of the VA sector in Jersey. It is an overview rather than an assessment because the sector simply isn’t yet large enough locally to generate enough systematic data. Only three such entities are currently registered with the Jersey Financial Services Commission, although this will inevitably grow, and there are other businesses dealing with third parties who have exposure to VAs.
Whatever your attitude to cryptocurrency, it’s evident that the sector is incredibly volatile. In May 2022 the value of global crypto assets fell from a peak of around $3 trillion to $1.3 trillion, and the value of cryptocurrencies (including the well-known Bitcoin) has also been on an expensive downward rollercoaster.
The risk overview concludes (among other things) that the limited exposure in the Island has helped reduce the risk for the moment, but this goes hand in hand with a general lack of knowledge about the sector. While there are people locally who have the requisite knowledge to operate in this sector, further work is needed from industry and government to assess and manage the risks as they evolve. What seems clear from the development of the sector to date is that if you want to get into the VA sector, you need to know your onions.