30 Sept ‘26 - Digital Assets, Tax, and Caribbeanisms

This week on The Offshore Report, we’re looking at VASP changes in Guernsey, the lack of Clarity in the U.S., updates on global minimum tax, and Caribbeanisms in the Oxford English Dictionary.

Guernsey VASP changes

To Guernsey first, where the Guernsey Financial Services Commission (the GFSC) has announced changes to its digital-finance framework, effective from tomorrow, 1 October.

Key amongst the changes is that firms already licensed by the GFSC will no longer automatically need a separate VASP licence whenever they undertake virtual-asset activities.

The reforms also remove blanket restrictions on VASPs serving retail customers and separate environmental reporting requirements.

The stated aim behind the changes is to reduce duplication and barriers to entry while creating a practical route for businesses wanting to develop digital-finance products in Guernsey.

These changes form part of a wider Digital Finance Initiative that Guernsey is pursuing, with other announcements including an Innovation Sandbox – enabling businesses to engage with the GFSC at a developmental stage – and a Finance Sector Concierge – creating a single point of contact for those considering Guernsey at an early stage. 

Guernsey is making a clear drive to attract more businesses to the jurisdiction, and especially those in the digital assets space…

…which leads us nicely into one of the major pieces of recent news, the U.S.’s lack of Clarity.

A lack of Clarity in the U.S.

For those of you who aren’t familiar with it, the Clarity Act is a proposed U.S. federal framework for regulating digital assets and, in particular, clarifying the respective roles of the U.S.’s Securities and Exchange Commission (the SEC) and the Commodity Futures Trading Commission (the CFTC).

On 15 September, the legislation failed to advance after a Senate vote fell short of the number of votes needed.

Technically, the Act is on hold, and could still come back for a further vote, but, with U.S. midterm elections coming up later this year, and an expectation that both houses (the Senate and the House of Representatives) might flip from Republican to Democrat control, this was the opportunity for the Republicans to get the Act passed.

So, why is this relevant to Offshore?

Because it keeps digital assets very much in a realm of uncertainty within the U.S.

Most of the key Offshore jurisdictions have passed specific digital assets legislation and the expectation was that Clarity could bring equivalent provisions for those operating in or with the U.S. market, moving the market away from Offshore and into the U.S. The failure to pass the Clarity Act arguably halts, or at least slows, that move.

However, this may not be a full reprieve for the Offshore world. The temperature in the U.S. government is still one of warmth toward Crypto.

Just two days after Clarity stalled, the SEC kept the U.S. Crypto car on the road by announcing an Innovation Exemption for tokenised stocks on certain tokenised securities venues.

So, while the Senate may have pumped the breaks for digital assets, the SEC signalled to the markets that its approach is to continue supporting Crypto.

How this will affect Offshore in the long run, we’ll have to wait and see.

Markets want certainty and stability and so long as Offshore can offer that, where the major Onshore jurisdictions can’t, it can only be a good thing for their future as the best place to conduct Crypto business.

The OECD’s Pillar Two

From digital assets, let’s turn to something more traditional – tax. Because, while the regulatory landscape for Crypto continues to evolve, there is another major development reshaping the international financial system: the OECD’s global minimum tax.

 On 11 September, the Organisation for Economic Co-operation and Development (OECD) released another package of measures relating to the global minimum tax, or Pillar Two.

Put simply, Pillar Two is designed to ensure that large multinational groups pay an effective tax rate of at least 15%, in each jurisdiction where they operate. Where the effective rate falls below that level, the rules can result in a top-up tax.

The latest development is that the OECD is now moving beyond creating the rules and into checking how jurisdictions are implementing them.

A new full legislative review process will assess domestic Pillar Two legislation against the OECD's agreed rules and identify inconsistencies.

In less technical terms, the OECD has written the rules — and it's now checking the homework.

So, again, why is this relevant to Offshore?

Well, as you’re probably aware, tax neutrality has historically been one of the selling points of the Offshore world.

Jersey, Guernsey, and Bermuda have now all brought in changes to apply the rate and collect the 15% themselves.

The BVI and Cayman are not yet included on the OECD’s implementation list, which may mean that another jurisdiction ultimately collects any top-up tax.

For large multinational groups, within the scope of the rules, the benefit of locating profits in a low-tax jurisdiction becomes less significant IF the rules ultimately bring the effective tax rate up towards 15%.

But that’s a big if.

The U.S. has previously rejected the global minimum tax, in favour of a separately negotiated approach and, for the time being, the global minimum tax only applies to those multinationals that have a consolidated revenue of at least € 750 million (within a particular period).

Tax has only ever been a part of the Offshore story, and while these changes may have some impact in the long run, it won’t ultimately affect the other aspects of Offshore that make their use so appealing for international business: such as regulatory certainty, modern legal infrastructure, professional expertise, fund and fiduciary services, and access to international capital.

Caribbean Updates to the OED

And, finally… something a little lighter than tax.

The Oxford English Dictionary has just added a new collection of words from the Caribbean and Bermuda to its latest edition.

From Trinidad and Tobago, we now officially have “hornerman” — a man who's being unfaithful — and “to get on”, meaning to have an emotional outburst or make a scene.

There's “vex money” — money kept by a woman for emergencies or unexpected circumstances.

And then there are the slightly more sinister additions: “jablesse”, a supernatural female spirit from Caribbean folklore, and “douen”, a legendary child-like spirit with backward-facing feet.

There are food-related additions too, including peanut punch and sugar cake, as well as Trinbagonian and canboulay.

And from Bermuda “hamma”, meaning a friend, “bimpert”, meaning a foolish person, and “to cut someone's tail” — meaning to beat someone up. Try and avoid that one!