Status: In force in Guernsey. The Lending, Credit and Finance (Bailiwick of Guernsey) Law, 2022 is Guernsey’s statutory framework for consumer credit, financial firm business, virtual asset service providers, and financial platforms. This profile focuses on Part III VASPs. The Guernsey Financial Services Commission states that the law came into force on 1 July 2023 and that, from that date, persons carrying on covered activities must hold an appropriate licence unless exempt.
The regime gives the Guernsey Financial Services Commission a licensing and supervisory perimeter for firms carrying out virtual asset activity in or from the Bailiwick. GFSC’s FAQ describes Part III as covering financial firm business and virtual asset service providers, with individuals or firms generally needing a Part III licence if they provide those services within the Bailiwick unless an exemption applies.
Part III VASP licensing under the LCF Law
GFSC application guidance separates the LCF licensing categories into Part II credit and home finance, Part III financial firm business, Part III VASP activity, and Part IV financial platforms. For VASPs, the application page identifies the relevant category as Virtual Asset Service Providers (Part III VASP) for persons carrying out virtual asset activities. The same page states that from 1 July 2023, anyone wishing to provide services covered by the law must hold a licence unless covered by a class exemption or individual exemption.
The detailed LCF Rules and Guidance treat Part III VASP licences separately from other Part III financial firm business licences. They provide that holders of other Guernsey regulatory licences who carry on activities regulated under Part III VASP must hold a Part III VASP licence. The rules also require applications to specify the VASP activities the applicant intends to carry on, and licensees may not undertake activities outside those specified without prior written GFSC approval.
Covered virtual asset services
The LCF Rules and Guidance list VASP activities to include exchange between virtual assets and fiat currencies, exchange between one or more forms of virtual asset, transfer of virtual assets, safekeeping or administration of virtual assets or instruments enabling control over virtual assets, and participation in or provision of financial services relating to an issuer’s offer or sale of a virtual asset, including initial coin offerings. GFSC guidance states that these activities should be interpreted broadly and generally in line with FATF standards.
Retail boundary, privacy restrictions and custody controls
Under the current LCF Rules and Guidance, Part III VASP licensees are only permitted to provide VASP services to institutional and wholesale counterparties. The guidance says Part III VASPs must not offer products or services targeted at retail customers, even through an intermediary, and the rules prohibit dealing in, trading in, or offering virtual assets or virtual asset services that aim to obscure the parties to a transaction or the flow of assets.
The rules also impose safekeeping requirements for VASPs with custody of customer virtual assets. These include keeping safe, or arranging safekeeping by an eligible custodian of, documents of title, cryptographic keys, or other means of control, recording assets in the customer’s name or approved custodian/nominee arrangements, identifying customer entitlements separately from the licensee’s own beneficial ownership, and limiting use or lending of customer assets without consent and other conditions.
Environmental declaration and AML/CFT context
Part III VASP licensees must publish annual information about the environmental impact of the consensus mechanisms of each virtual asset with which they deal. Where a consensus mechanism materially consumes resources such as electrical or computational power, the declaration must include carbon emissions and energy consumption for transactions carried out by or on behalf of the licensee.
GFSC has also linked the LCF framework to international standards and anti-financial-crime expectations. Its consultation announcement said the law introduced licensing for a wide range of crypto-related activities partly to ensure Guernsey remained compliant with FATF expectations, while a later digital finance consultation proposed targeted amendments to open up the VASP regime, including removal of the blanket restriction on retail activity and simplified licensing requirements. Those proposals were under consultation through 6 March 2026, with further GFSC feedback on other digital finance initiative matters expected after an initial May 2026 response.