Financial Services Authority helps provide certainty to crypto business looking for registration

The Isle of Man Financial Services Authority (“IOMFSA”) has introduced a new process which will allow crypto businesses to apply for a ‘subject to’ registration under the Designated Businesses (Registration and Oversight) Act 2015. This comes soon after the IOMFSA published guidance in September 2020, setting out how tokens issued using Distributed Ledger Technology (“DLT”), such as blockchain, will be treated under current financial regulatory requirements of tokens issued using DLT.

Under the IOMFSA’s registration policy for designated businesses (including crypto businesses), crypto businesses are required to have a physical presence on the Isle of Man and have at least two Isle of Man resident directors to ensure management and control of the business is on the Island. This ensures that effective oversight can take place.

However, amidst the global pandemic and travel restrictions the IOMFSA has addressed the need for more certainty for businesses considering an Isle of Man registration to conduct crypto business and has introduced a ‘subject to’ registration, clearing businesses through registration if the rest of the registration criteria is satisfied and accepting the application in the knowledge relocation is required before formal registration takes place. At the time the applicant is ready to be registered they must also demonstrate that the business operations have not materially altered in the time between the ‘subject to’ registration being issued and the relocation taking place. This means until residency is established, the registration is not live, but the applicant has certainty over the registration. Whilst holding a ‘subject to’ registration the business must not hold itself out as being a registered business operating from the Isle of Man.

Steve Billinghurst, Regulatory lead at Digital Isle of Man, commented:

“This welcomed option comes at a time when crypto businesses are looking for some regulatory certainty, not just for the final outcome but for the process and regulatory direction. The route to registration for crypto businesses has been well trod by the IOMFSA over the past five years, each time they continue to adapt and strengthen the opportunities available.

The area of regulation for crypto currencies and digital assets is continually moving, just consider the amount of developments in 2021. The IOMFSA continues to support good quality crypto business being able to work within a leading regulatory jurisdiction in a way that maintains the fight against financial crime, supports the positive reputation of the Isle of Man and provides consumer protection.”

To read the full guidance notes see: https://www.iomfsa.im/media/2717/regulatory-perimeter-faqs.pdf