The Institute of Directors (IoD) Guernsey has responded to the Guernsey Financial Services Commission’s (GFSC) consultation paper ‘Supporting Growth with Digital Finance’.
The response draws on insights from the latest IoD Guernsey member survey, capturing views from a cross-section of business leaders and directors operating across the Bailiwick. These results provide a useful snapshot of senior business opinion in Guernsey on the future of digital finance regulation.
Survey respondents represented a broad range of sectors, including financial and insurance services (48%), construction (12%), wholesale and retail (12%), professional and scientific services (8%), and the public sector (8%), alongside several other industries. Within financial services, respondents were primarily drawn from funds and investment management (50%), banking (29%), and fiduciary, trust and private wealth (21%).
General direction
IoD Guernsey members broadly welcome the GFSC’s Digital Finance Initiative, and the proposals outlined in the consultation paper, which was published in December 2025.
Respondents recognise that digital finance is a rapidly evolving global sector, and that regulatory frameworks must evolve to remain competitive while maintaining high standards of governance.
Guernsey’s position in the global landscape
When asked how well the GFSC’s proposals position Guernsey within the global digital finance landscape, the largest group of respondents (37%) said the island was ‘adequately positioned, broadly aligned with peer jurisdictions.’
A further 21% believed Guernsey is ‘well positioned, sensible and credible but not leading.’ Only 5% felt that Guernsey currently holds a clear competitive advantage.
Notably, 21% of respondents indicated that they did not yet have enough information to form a view. This suggests that there may be scope for improved communication and transparency as the proposals develop.
Overall, members felt that the consultation broadly strikes the right balance between enabling innovation and protecting Guernsey’s reputation as a well-governed financial jurisdiction. A majority (53%) described the balance as ‘about right’, while 41% felt the approach was either ‘too cautious’ or ‘slightly too cautious.’
Encouragingly, no respondents felt the proposals were too permissive from a risk perspective.
The IoD Guernsey’s view is that a degree of conservatism is consistent with the island’s long-standing reputation as a safe and well-regulated jurisdiction. If combined with an active market development strategy, this positioning could help attract a distinct segment of institutional and well-governed digital finance businesses.
Stablecoin: a significant opportunity
Members identified the proposed stablecoin framework as the most forward-looking and commercially significant section of the consultation paper and believe this is the area where the island has the greatest opportunity to differentiate itself internationally.
The proposed framework includes full backing, high-quality liquid reserves, clear redemption rights and strong custody and transparency requirements, prioritising an institutional-grade approach to digital assets.
This framework is designed to create a structure that banks and institutional investors can engage with confidently, aligning with Guernsey’s reputation as a safe, well-governed financial jurisdiction.
However, members highlighted several areas where further clarity or consideration may be beneficial.
Reserve assets and maturity
The proposed restriction of reserve assets to cash, government bonds and money market instruments, with a tenor of up to three months, was broadly viewed as sensible.
Some respondents questioned whether extending the maturity window to six months or one year, subject to appropriate maturity ladder requirements, could offer issuers additional flexibility without materially increasing risk.
Interest-bearing stablecoins
The IoD Guernsey strongly endorses the proposal to permit interest-bearing stablecoins.
This feature is not widely available in other leading jurisdictions and could represent a genuine opportunity for Guernsey to differentiate itself. Allowing issuers to pass a portion of reserve income to stablecoin holders could create an attractive value proposition for institutional customers.
Local asset holding
Members welcomed the expectation that reserve assets should be held locally. This approach enhances the GFSC’s oversight and reinforces Guernsey’s status as the jurisdiction of substance for any stablecoin issued under its framework.
Redemption timelines
The proposed five-day redemption window was generally viewed as a reasonable compromise between providing timely settlement for users and allowing issuers sufficient time to liquidate underlying assets in an orderly manner.
The IoD Guernsey also noted that the global stablecoin market is evolving rapidly. The consultation references the Monetary Authority of Singapore (MAS) framework and the US GENIUS Act, both of which continue to develop.
For Guernsey to remain competitive, speed of implementation will be critical. While the island may not be a first mover in this market, it has the opportunity to establish itself as a credible jurisdiction for institutional digital finance if the framework is finalised and implemented promptly.
Risk and financial crime
The IoD Guernsey fully supports the GFSC’s position that the digital finance framework must not dilute existing Anti-Money Laundering (AML) and Countering the Finance of Terrorism (CFT) standards.
The use of blockchain technology as an enabler of more financial crime detection instead of a mechanism for obscuring transactions is a genuinely positive development. Whilst it has the potential to enhance financial crime monitoring and transparency when used appropriately, the Commission is right to emphasise that tolerance for digital finance activity must decrease sharply where appropriate safeguards and controls are not in place.
The institute also supports the proposal to remove the blanket restriction on Virtual Asset Service Providers (VASPs) offering services to retail customers.
Survey results suggest that many members support a more nuanced approach, with 39% of respondents in favour of permitting retail participation with strong, clearly defined safeguards. 22% of members were in support of retail participation with proportionate, disclosure-based safeguards. An additional 22% favour differentiating by product type, such as treating payment-related products differently from investment products, and only 6% of members would maintain the current restriction outright.
The need for a market development strategy
Perhaps the most significant finding from the IoD member survey is that 56% of members identified 'how Guernsey will actively attract digital finance business' as the most under-addressed element of the consultation.
Members broadly support the regulatory reforms proposed by the GFSC but also recognise that regulatory improvements alone will not drive industry growth.
Guernsey faces increasing competition from jurisdictions such as the Cayman Islands, the British Virgin Islands, Dubai, Singapore, Ireland and others, all of which are actively marketing their digital finance credentials.
Historically, first movers in offshore financial services have tended to dominate new markets and products. Whilst Guernsey is not an early entrant into digital finance, it still has the opportunity to attract the well-governed, institutional digital asset businesses if it moves with sufficient urgency and visibility.
Recommendations
The IoD Guernsey recommends that the GFSC and the States of Guernsey work alongside industry bodies such as Guernsey Finance, the Guernsey International Business Association (GIBA) and the wider private sector to develop and publish a clear inward investment and business development strategy for digital finance.
This strategy should include:
A defined target market strategy identifying which types of digital finance businesses Guernsey is best placed to attract, such as institutional stablecoin issuers, fund tokenisation platforms and digital asset custodians.
An enhanced concierge model that goes beyond regulatory guidance to offer substantive commercial and operational support for new entrants, including clear licensing timelines.
A published implementation roadmap so that prospective businesses have clarity on when the framework will be fully operational.
Overall, The IoD Guernsey broadly endorses the direction and substance of the GFSC’s digital finance proposals.
The stablecoin framework, in particular, represents a strong foundation. It is ambitious enough to be commercially relevant while remaining sufficiently conservative to maintain credibility.
As a whole, the proposals position Guernsey as a safe, well-governed jurisdiction capable of supporting institutional-grade digital finance, which is the appropriate strategic positioning for the island.
Our overriding message is that whilst these proposals are necessary, they are not sufficient.
The key challenge now will be ensuring that the speed of implementation matches the quality of the framework, and that regulatory reforms are supported by a clear and visible strategy to attract the businesses Guernsey is now equipped to host.
The IoD Guernsey would be pleased to engage further with the GFSC on any matters raised in this response and would welcome the opportunity to participate in any future stakeholder discussions as the proposals are finalised.