Structuring the next trillion: Guernsey's framework for tokenised funds

Guernsey's funds regime, regulatory engagement and forthcoming digital finance reforms position the island to support the next generation of tokenised fund products. 

As digital finance reshapes the financial services industry, interest in tokenised funds products continues to grow. For sponsors, the attraction is clear: tokenisation has the potential to improve operational efficiency, enhance transparency and support new models of investor access and transferability. 

For any sponsor evaluating where to domicile tokenised funds structures, regulatory readiness is critical. Guernsey is well placed in this respect. The Guernsey Financial Services Commission (GFSC) has already confirmed that certain fund tokenisation structures can operate within the existing funds framework, and its Digital Finance Initiative points towards a broader and more flexible regime for tokenised funds, digital custody and related infrastructure. 

This article explores how Guernsey’s legal and regulatory framework, combined with forthcoming digital finance reforms and access to European professional investors, supports the development of commercially viable tokenised funds. 

Guernsey's engaged and collaborative regulator  

The GFSC's Innovation Sandbox and Concierge service is a structured pre-application pathway that allows sponsors and their advisers to raise specific regulatory questions (for example, on custody arrangements, wallet-level customer due diligence or smart-contract transfer mechanics) and receive substantive guidance before a decision to launch or seek full regulation is required.  

For digital finance structures, where the regulatory treatment of a specific mechanism is often genuinely novel, pre-application dialogue of this kind removes substantial friction from the structuring process.  

The GFSC has also demonstrated a willingness to consider pilot waivers where specific rules designed for traditional instruments are in tension with the technology being deployed. This willingness to engage and collaborate with market participants, combined with authorisation timelines measured in days rather than weeks, is of real value to sponsors. It's also a relevant data point to be borne in mind when choosing between jurisdictions with otherwise comparable legal frameworks. 

Guernsey's regulatory environment and fund architecture 

The GFSC's policy statement on fund tokenisation confirmed Guernsey's openness to innovation, noting that a token representing an interest in a collective investment scheme should not amount to a virtual asset for the purposes of the Lending, Credit and Finance (Bailiwick of Guernsey) Law, 2022. This means that a token should, therefore, sit outside Guernsey's VASP legislation, with regulation applying solely to the underlying fund product within Guernsey's existing protection of investors regime, allowing for fund structures to benefit from regulatory clarity.  

Guernsey's fund vehicle architecture has long offered speed to market, and this remains a priority for the GFSC. Recent updates to Guernsey's Private Investment Fund (PIF) regime, now in its third iteration following a decade of industry-led refinement, permits certain types of funds to be registered within one business day. Qualifying Private Investment Fund (QPIFs) geared for sophisticated qualifying investors provide an appropriately regulated product with proportionate regulation calibrated to that investor base. Further alignment with tokenisation is achieved by the 2025 removal of the cap on numbers of investors that may be admitted to a QPIF, permitting potentially unlimited token holders to invest in a product. 

Read more about the GFSC's updated PIF framework in our earlier briefing: Guernsey Private Investment Funds: 2025 updates. 

The PIF's regulatory simplicity, combined with the jurisdiction's innovative legal structuring options provide an efficient chassis for the tokenisation of fund products in a variety of configurations to reflect a wide range of commercial requirements. Complex mechanics of digital issuance (segregated series, ring-fenced cells, multiple classes of token representing discrete pools of assets) can be reflected cleanly at the vehicle level, for example by using protected cell or incorporated cell companies to segregate token classes and / or asset pools rather than relying on purely contractual arrangements. This structural flexibility can deliver a full range of on-chain products allowing sponsors to create a full range of effective legally robust bespoke structures. 

Guernsey’s regulatory framework is not limited to institutional grade investors: we retain the full spectrum of authorised and registered closed-ended and open-ended fund structures, offering sponsors the flexibility to match structure to investor base, liquidity profile and distribution strategy. 

Incoming updates 

The GFSC's Digital Finance Consultation Paper, which closed to responses on 6 March 2026, proposes a broader regulatory framework covering fund tokenisation, stablecoins, digital asset custody and a streamlined approach to retail VASPs. This points to a positive future in this space for Guernsey. 

The Commission proposes that a tokenised security, bond, derivative or other "Category 2 controlled investment" will remain regulated under Guernsey's investment law in the same way as the underlying asset. It also indicates an intention to permit tokenisation of Guernsey funds on public blockchains rather than limiting them to private chains, subject to appropriate controls such as, for example, smart-contract-level transfer restrictions for eligible, CDD-cleared investors.

In our view, the scope of the consultation is, in places, wider than parallel developments elsewhere and intended to deliver a fully considered regulatory regime. We anticipate that the new framework will support fund tokenisation, digital asset custody and stablecoin issuance within a coherent, regulatory framework. Following the closure of the consultation, the GFSC's recently published feedback paper shows an early sign of the direction of travel. The paper announces changes to the jurisdiction's anti-money laundering handbook intended to support the effective use of technology by the market, demonstrating Guernsey's comprehensive approach to facilitating digital finance. 

Access to investors 

Guernsey funds access the European professional investor market through the national private placement regimes (NPPR) in any target member state. This matters for sponsors whose investor base includes European institutional capital, such as pension funds, insurers and family offices structured through EU fund vehicles. It is a feature of the Guernsey offering that many competitor offshore jurisdictions cannot replicate: for a tokenised fund intended to be marketed into Europe, this could be critical.  

When taken together with the Bailiwick's regulatory and legal infrastructure, the depth of our fund administration and legal community and the concentration of specialist digital finance practitioners across the island's advisory firms, the case for Guernsey as a tokenised fund structure domicile is compelling. 

What's next?

The regulatory and legal infrastructure to support commercially effective tokenisation of funds in Guernsey is already largely in place. We eagerly await the GFSC's further updates on responses to the Digital Finance Consultation, expected soon, and are confident this initiative will deliver further regulatory clarity for market participants and build on the positive direction of travel for digital finance in Guernsey.  

Sponsors and their advisers evaluating where to domicile tokenised private capital structures should be engaging with Guernsey-based counsel and fund administrators now, ahead of the next wave of authorisations.  

How Ogier can help 

Ogier is co-headline sponsor of the Guernsey Funds Forum 2026, taking place in London on 14 May. Our funds experts will be on the ground to discuss with sponsors and advisers the jurisdiction's developing potential for tokenisation, flexible structuring and Guernsey's established role as a gateway for global private capital.  

Contact our team to find out more.  

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Disclaimer

This client briefing has been prepared for clients and professional associates of Ogier. The information and expressions of opinion which it contains are not intended to be a comprehensive study or to provide legal advice and should not be treated as a substitute for specific advice concerning individual situations.

Regulatory information can be found under Legal Notice