Stablecoin issuer / redeemer 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.

Guidance Note on Regulation of Virtual Asset Service Providers (VASPs), 2020 (issued by FSC)

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:

"Electronic money" as electronically stored monetary value represented by a claim on the issuer which is issued on receipt of funds for the purpose of making payment transactions, and which is accepted by a natural or legal person other than the electronic money issuer.

"Payment token" as a virtual asset that is primarily intended to be used as a medium of exchange, a store of value or a unit of account.

If a stablecoin meets these definitions, it falls under the direct regulatory purview of the Bank of Jamaica.

Securities: While less common for typical stablecoins, if a stablecoin is structured in a way that confers investment rights, represents an ownership interest in an enterprise, or is otherwise offered as an investment product, it could be classified as a "security" under the Securities Act. In such a case, it would be regulated by the FSC.

For E-money/Payment Tokens (under BOJ): If a stablecoin is classified as e-money or a payment token under the Payment Systems Act, the issuer would be subject to stringent prudential and operational requirements, including robust reserve requirements.

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.

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.

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.

Securities Issuers (under FSC): If a stablecoin is classified as a security, its issuance would be subject to the licensing and prospectus requirements under the Securities Act, regulated by the FSC.

The Proceeds of Crime Act (POCA), 2007 (as amended): This is the cornerstone of Jamaica's AML framework. It criminalizes money laundering and provides for the investigation, prosecution, and confiscation of the proceeds of crime. It also places obligations on "financial institutions" and "designated non-financial businesses and professions" (DNFBPs) to implement AML/CFT measures. VASPs, depending on their activities, are typically considered under these categories.

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.

Identification and Verification of Customers:

Beneficial Ownership Identification:

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

Proceeds of Crime Act (POCA): This is the foundational legislation for anti-money laundering.

Important Nuance: If an individual or entity is engaged in the regular and systematic buying and selling of cryptocurrency with a view to profit, this activity may be deemed a "trade or business." In such cases, the profits would be subject to income tax rather than capital gains tax.

Record Keeping: Taxpayers engaged in cryptocurrency activities are strongly advised to maintain meticulous records. This includes: