The island of Jersey has approved the launch of a bitcoin investment fund, which the government claims will be the first such fund to be regulated.

Called the Global Advisors Bitcoin Investment Fund (GABI), the fund received regulatory approval from the Jersey Financial Services Commission (JFSC) earlier this week. The fund, set up by Global Advisors Jersey Limited (GAJL), is set to launch on the 1st August.

The Island of Jersey is the largest of the Channel Islands and is a self-governing British Crown dependency. Due to its liberal tax policies the island developed into a tax haven during the 20th century.

As a consequence, the island’s economy is based largely on financial services, although in recent years it has started attracting e-commerce companies and now has a bitcoin advocacy group that is campaigning to turn it into a 'bitcoin isle'.

The island’s assistant chief minister in charge of financial services, Senator Philip Ozouf, welcomed GABI's regulatory approval and imminent launch, saying Jersey is pleased to be paving the way toward regulated bitcoin funds.

“Fintech, which broadly defines the emerging digital industry in finance, is a sector that I believe holds significant opportunities for Jersey,” said Ozouf.

He emphasized that the government will “offer its full support” for innovative measures undertaken by the industry and the island’s regulator, adding:

Daniel Masters, Director of GAJL, said Jersey prides itself on being among the top-tier jurisdictions when it comes to compliance, which is why the firm chose to base its bitcoin fund in Jersey.

Masters stressed that GAJL is in a good position to manage the fund:

GAJL says leading bitcoin service providers are on board, including Netagio and Elliptic, along with reputable legal advisors and fund administrators.

Elliptic told CoinDesk that it will be providing bitcoin custody services to GABI through its insured storage product, Elliptic Vault.

Dr Tom Robinson, COO and co-founder of Elliptic, said:

Local tech hub Digital Jersey welcomed the news, saying that it will continue to support several business initiatives looking at ways of using cryptocurrencies in the island, including retail outlets and a potential cryptocurrency exchange.

Paul Masterton, Chairman of Digital Jersey believes the decision could attract global interest:

While Jersey is widely seen as a tax haven, this does not mean it closes a blind eye to AML and compliance standards. On the contrary, the jurisdiction has a very robust regulatory framework designed to attract potential investors.

The government says it is committed to introducing an “appropriate and proportionate” AML regime in the field of digital currencies too. The government believes, though, that in-depth analysis of the risks posed by cryptocurrency must be carried out before the new AML regime can be introduced.

In terms of tax implications, the island’s Comptroller of Taxes insists all transactions involving cryptocurrencies must be reflected in accounts and they will be taxable under Jersey income tax provisions relating to foreign exchange. The general sales tax due must be calculated using the sterling value of the cryptocurrency at the time it takes place.