Isle of Man FSA updates registration process for crypto businesses

By Sunniva Kolostyak

The Isle of Man Financial Services Authority (IOMFSA) is allowing crypto businesses to apply for a ‘subject to’ registration, allowing companies to set up shop without having to relocate to the island.

The changes have come in response to the Covid-19 crisis and global travel restrictions, as the Isle of Man is looking to provide more certainty for businesses considering registration in the jurisdiction.

Under the IOMFSA’s registration policy for designated 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 to ensure effective oversight.

The ‘subject to’ registration will be clearing businesses through registration if the rest of the registration criteria is satisfied. The application will then be accepted in the knowledge that relocation is required before formal registration takes place.

The applicant 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 – meaning that until residency is established, the registration is not live, and the company cannot hold itself out as being an Isle of Man business.

The new registration process is under the Designated Businesses (Registration and Oversight) Act 2015 and follows 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.

Steve Billinghurst, Regulatory lead at Digital Isle of Man, an executive agency for the Isle of Man Government 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.”