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BVI Companies Involved in Cryptocurrency Space May Fall Under Existing Regulatory Framework

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The British Virgin Islands (BVI) has a well-established regulatory framework that governs companies involved in the cryptocurrency, blockchain technology, and Web3 space. A recent analysis suggests that BVI entities engaged in these activities may be subject to multiple regulations.

VASP Act: Key Provisions

The VASP Act, which regulates virtual asset service providers (VASPs), is a key piece of legislation in the BVI. Under this act, companies providing virtual asset services must register with the Commission and adhere to strict guidelines. The act also explicitly states that a person registered under the VASP Act solely engaged in providing a virtual asset service does not need licensing under the Securities and Investment Business Act (SIBA) or the Financing and Money Services Act (FMSA).

Sales Regulation

The sale of virtual assets in or from the BVI is not inherently regulated by the VASP Act, unless a company provides financial services related to virtual asset issuance or transfer. In such cases, the entity must register with the Commission under the VASP Act.

SIBA: Investment Services and Activities

SIBA oversees the provision of investment services within the BVI, including:

  • Dealing in investments
  • Arranging deals in investments
  • Investment management
  • Investment advice
  • Custody of investments
  • Administration of investments
  • Operating an investment exchange

The definition of “investments” is broad and may encompass shares, interests in a partnership or fund, debentures, and other financial instruments.

Money Transmission Laws and Anti-Money Laundering Requirements

The Financing and Money Services Act governs money services businesses, including:

  • Automated teller machine services
  • Money transmission services
  • Currency exchange services

The act’s definition of “money” typically refers to fiat currencies rather than cryptocurrencies. However, the VASP Act provides an exemption for companies registered under the VASP Act solely providing virtual asset services from licensing requirements under FMSA.

Anti-Money Laundering Requirements

Companies involved in the cryptocurrency space must also comply with anti-money laundering (AML) regulations. The BVI AML/CTF regime requires:

  • Designating an AML compliance officer
  • Appointing a designated money laundering reporting officer
  • Establishing procedures for identifying counterparties and conducting risk-based monitoring
  • Maintaining accurate records
  • Providing adequate training for employees

Conclusion

The BVI has a comprehensive regulatory framework that governs companies involved in the cryptocurrency space. While some regulations may not be explicitly applicable to virtual assets, companies must still ensure compliance with existing laws and guidelines.

It is essential for BVI entities engaged in these activities to seek legal advice to determine their specific obligations under the various pieces of legislation mentioned above.

Lawyers from Regulated United Europe provide legal support for crypto projects and help with adaptation to MICA regulations, ensuring that companies operating in the cryptocurrency space comply with all relevant regulatory requirements.