Crypto-funded debit card in Jamaica

Bank of Jamaica (BOJ): Responsible for monetary policy, financial system stability, and the regulation of payment systems and e-money.

Financial Services Commission (FSC): Responsible for the supervision of non-deposit-taking financial institutions, securities, and insurance.

Virtual Asset: Stablecoins are unequivocally classified as "Virtual Assets" under the Financial Services Commission's Guidance Note on Regulation of Virtual Asset Service Providers (VASPs), 2020. This guidance adopts the Financial Action Task Force (FATF) definition of virtual assets.

Electronic Money (E-money) / Payment Token: If a stablecoin is pegged to the Jamaican Dollar (JMD) and intended for use as a means of payment or store of value, it would likely be classified as "electronic money" or a "payment token" under the Payment Systems Act, 2021.

The Payment Systems Act, 2021 defines:

E-money/Payment Token Issuers (under BOJ): Issuing stablecoins classified as e-money or payment tokens would require licensing as a "Designated Payment Service Provider" (DPSP) or an "Authorized E-money Issuer" by the Bank of Jamaica under the Payment Systems Act, 2021. This involves a rigorous application process, meeting capital adequacy, governance, risk management, and operational resilience standards.

Section 31 of the Payment Systems Act, 2021 requires an "authorized e-money issuer" to safeguard client funds, ensuring that funds received in exchange for electronic money are placed in a segregated account at a financial institution or invested in secure, low-risk assets. The Act generally implies a 1:1 backing requirement to ensure redemption.

Virtual Asset Service Providers (VASPs) (under FSC): Entities offering services related to stablecoins (e.g., exchange, transfer, custody, or participation in financial services related to stablecoins) would be considered Virtual Asset Service Providers (VASPs). The FSC's Guidance Note on Regulation of VASPs, 2020 requires VASPs to:

Register with the FSC.

Comply with AML/CFT obligations (e.g., customer due diligence, suspicious transaction reporting).

Note: While this guidance covers VASP activities, a specific licensing regime for VASPs is still evolving, with the guidance serving as an interim measure and outlining expectations. The FSC is expected to formalize this further.

Bank of Jamaica (BOJ) Guidance Note on Virtual Asset Service Providers (VASPs) for Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) Purposes: This is the most crucial document specifically addressing VASPs' obligations.

Exchange between virtual assets and fiat currencies.

Future VASP Licensing: Jamaica is expected to introduce specific licensing requirements for Virtual Asset Service Providers (VASPs) in line with FATF recommendations. Under FATF definitions, "safeguarding or administering virtual assets or instruments enabling control over virtual assets" is a VASP activity. Therefore, a future VASP licensing regime will likely encompass dedicated requirements for digital asset custodians.

Development of VASP Framework: Jamaica is actively working towards establishing a comprehensive regulatory framework for Virtual Asset Service Providers (VASPs). Both the Bank of Jamaica and the Financial Services Commission have acknowledged the need for specific legislation to regulate the burgeoning digital asset space.

FinTech Regulatory Sandbox: The Bank of Jamaica (BOJ) has established a FinTech Regulatory Sandbox which allows innovative financial services, including those involving digital assets (and potentially custody), to be tested under regulatory supervision for a limited period. Firms operating within the sandbox may receive temporary exemptions or waivers from certain regulatory requirements, allowing them to iterate and gain insights. Successful participants may then transition to a full regulatory regime once developed.

Bank of Jamaica (BOJ)

Role: The BOJ is the central bank and the primary regulator for banks, payment service providers, and is increasingly taking on a supervisory role for fintech innovations, including virtual assets, especially those impacting monetary policy and financial stability. While specific VASP licensing frameworks are still under development, the BOJ issues guidance and directives that clarify how existing AML/CFT laws apply to virtual asset activities.

Identification and Verification of Customers:

Obtaining and verifying the customer's identity using reliable, independent source documents, data, or information (e.g., government-issued ID, passport, driver's license).

Beneficial Ownership Identification:

Identifying and taking reasonable measures to verify the identity of the beneficial owner(s) of customers, including for legal persons and arrangements. This means identifying the natural person(s) who ultimately own or control the customer.

Implementing a risk-based approach to CDD, meaning:

Simplified Due Diligence (SDD): May be applied where the risk of money laundering or terrorist financing is lower.

Enhanced Due Diligence (EDD): Must be applied in higher-risk situations, such as:

Transactions involving politically exposed persons (PEPs).

Customers from high-risk geographic locations.

Complex, unusual, or large transactions.

Evidence fact jm.licensing.relationships-with-unowned-or-unverified not found (may have been renamed).

Conducting ongoing due diligence on the business relationship and scrutiny of transactions undertaken throughout the course of that relationship. This includes ensuring that transactions are consistent with the VASP's knowledge of the customer, their business, and risk profile, including, where necessary, the source of funds.

The Financial Investigations Division Act (FIDA), 2010: This Act establishes the Financial Investigations Division (FID) as Jamaica's Financial Intelligence Unit (FIU), responsible for receiving, analyzing, and disseminating suspicious transaction reports.

Stance on Crypto: Cautious. While supporting innovation, the BOJ has repeatedly warned the public about the risks of unregulated cryptocurrencies, emphasizing their volatility and lack of consumer protection. They have clarified that cryptocurrencies are not legal tender in Jamaica.

Focus on Warnings and Education: Regulators have primarily focused on public education and issuing warnings about the risks associated with cryptocurrencies, including scams, volatility, and their potential use in illicit finance.

Financial Investigations Division (FID):

Rates: Corporate income tax in Jamaica is generally 25%.

However, fees charged for services facilitating cryptocurrency transactions (e.g., exchange fees charged by a crypto platform, advisory services related to crypto, software development for blockchain applications) would likely be subject to GCT.

The standard GCT rate in Jamaica is currently 15%.