Think piece on tokenisation published

The Policy Centre has published a think piece Time to tokenise by Jennifer Bridge, a board member and one of its lead researchers.  The summary is reproduced below –

Tokenisation—the digital representation of real‑world assets on distributed ledgers—is emerging as a major structural shift in global finance. Jersey’s Time to Win strategy positions the Island to lead in this space, supported by strong regulatory credibility, a top‑tier MONEYVAL rating, and deep expertise in fund administration and securitisation.

The Jersey Financial Services Commission (JFSC) has already issued guidance requiring Jersey incorporation, AML/CFT compliance, independent verification of asset backing, and a Jersey‑resident director. This principles‑based framework gives flexibility while maintaining high governance standards. Jersey’s involvement in international regulatory initiatives, including co‑leading the GFIN Tokenisation Project, further strengthens its position.

Tokenisation presents meaningful economic opportunities. Global tokenised markets could reach US$16 trillion by 2030, and even a small share would be significant for Jersey’s £6.9bn economy. Tokenised structures align well with Jersey’s existing strengths and could support new high‑value employment and fund administration activity.

However, risks are material. International bodies highlight vulnerabilities including redemption runs, leverage chains, contagion through shared platforms, smart‑contract failures and operational risks. Legal uncertainty persists across jurisdictions, and Virtual Asset Service Providers (VASPs) in Jersey are not yet subject to full prudential regulation. Rapid expansion before December 2026 when Jersey has to report on the recommendations in the MONEYVAL evaluation could expose the Island if AML implementation is not demonstrably robust.

The paper argues for cautious, quality‑controlled growth: prioritising institutional, fully collateralised structures; strengthening AML supervision; benchmarking against evolving global standards; and collecting better data to distinguish genuinely new activity from displaced traditional business.

Done well, tokenisation can reinforce Jersey’s competitiveness. Done poorly, it risks reputational damage that would be difficult to reverse.