I was fairly sure that was true. It puts one in a slightly odd position that the Channel Islands are not (I think) a Contracting State and they don't issue licences, but they do issue regulations. As such, it is not that clear what Country (as defined by the FAA) the CI are and if they are not the UK, then the CI is a country which does not issue licences and hence N-Reg operation is only legal with an FAA rating.
The Channel Islands are not a contracting state as that is merely a reference to their geographical location. Jersey and Guernsey are separate jurisdictions and are both Crown dependencies along with the Isle of Man. The UK signed up to the Chicago convention on behalf of the Crown dependencies who are self governing and have their own legislation, Jersey and Guernsey also share a DCA but do so only to save money. They are not part of the EU which is why they have their own legislation as EU and UK law is not enforceable there. You'll probably find that the FAA haven't thought about it at all as the licences are issued by the UK CAA.