ARC Reserve Currency, which has a minimum subscription of $25,000, is being marketed as a ‘stablecoin’ virtual currency and suggested as a ‘reliable and safe’ place to store savings suitable for those ‘in a country with rampant high inflation or significant political or financial instability’ who want to ‘provide for their family and save for their future’.
The Jersey ‘Initial Coin Offering’ (ICO) – believed to be the first to be based in the Island – was advised by law firm Carey Olsen, with administrative services provided by Jersey-headquartered JTC.
Proceeds from the sale of the coins will be placed into a ring-fenced, not for profit company, ARC Fiduciary Ltd, incorporated and regulated by the Jersey Financial Services Commission.
Those funds will then be held in cash reserves and invested in fixed income bonds, gilts, real estate loans and other structures.
Mark Grenyer, director of fund services at JTC, said: ‘It has been a fascinating and rewarding experience to work with professional colleagues and the impressive founders of ARC in seeing this pioneering project to conclusion.
‘We look forward to our continued role as the ICO moves forward and to further positive engagement with the government of Jersey and the Jersey Financial Services Commission as Jersey’s legal and regulatory frameworks in this area continue to develop.’
Counsel Chris Griffin, who led the Carey Olsen team, said: ‘Against a very tight timetable the Jersey regulator adopted a sensible and risk-based approach. The market will acknowledge that ICOs launched out of Jersey will have been approved by the local regulator, giving ICO investors a level of confidence that other jurisdictions may not be able to provide.’
Co-founders Cambridge University research fellow Dr Garrick Hileman and former Fidelity executive Stephen Findlay claim that ARC is ‘less volatile’ than other utility tokens such as Bitcoin.
In a press release Mr Findlay said: ‘We selected Jersey as it was clear that they are one of the most forward thinking and co-ordinated jurisdictions for cryptocurrencies. They were proactive and engaged in reviewing our approach and have enabled an important initial step in regulating the issuers of future crypto assets.
‘There is still much to be done on a global scale to establish an appropriate regulatory framework which can accommodate the borderless nature of crypto assets. Nonetheless we would recommend the issuer of any potential crypto asset to consider starting their efforts in Jersey,’ Mr Findlay said.
However, the Jersey Financial Services Commission warned at the end of last year of the risks of Initial Coin Offerings to retail investors, describing ICOs as ‘highly speculative and risky investments subject to high price volatility’. Specically, investors were cautioned about difficulty exiting the investment, inadequate information and high risk of loss.
The Commission’s statement also makes clear that even if an ICO has been granted consent under the Control of Borrowing Law, the JFSC does not take responsibility for the soundness of the scheme, the correctness of statements made or opinions expressed.
