Financial Crime World

BVI Welcomes FinTech Innovation Amid Regulatory Clarity

The British Virgin Islands (BVI) has taken a significant step towards embracing financial technology innovation by announcing that individuals or companies approved under the Sandbox Regulations prior to the VASP Act coming into force can notify the Commission of their intention to provide innovative services related to virtual assets.

VASPs Can Apply for Registration

Under the new regulations, Virtual Asset Service Providers (VASPs) not registered under the VASP Act or approved under the Sandbox Regulations can still submit an application to the Commission to operate in the BVI. The application must specify the intention to provide virtual asset services and innovative FinTech solutions.

Ownership and Licensing Requirements Clarified

The BVI has clarified its stance on ownership and licensing requirements for investment managers and funds dealing with cryptocurrencies:

  • Investment managers owning cryptocurrencies are not subject to restrictions.
  • However, they may need to apply for registration under the VASP Act if they hold virtual assets on behalf of third parties.
  • Investment funds can deal in virtual assets on a proprietary basis without registration.

Mining Remains Unregulated

Cryptocurrency mining remains an unregulated activity in the BVI, with high electricity costs making it unlikely to be efficient on a large scale.

Border Restrictions and Declaration

The BVI does not impose general border restrictions on the ownership or importation of virtual assets. However, as part of anti-money laundering efforts:

  • Individuals are required to declare cash transactions exceeding $10,000 under the Customs Management and Duty Act.
  • No specific restrictions are imposed on the ownership or importation of virtual assets.

Reporting Requirements

BVI companies providing virtual asset services must comply with reporting requirements under the Anti-Money Laundering Regulations (AML Regs). The OECD’s Crypto-Asset Reporting Framework will also be implemented in the BVI to standardize cross-border reporting on cryptocurrency transactions.

Estate Planning and Testamentary Succession

The treatment of virtual assets in estate planning and testamentary succession remains unclear in the BVI. However, it is expected that virtual assets will be treated similarly to other assets under BVI law, with a grant from the High Court Probate Registry required for legal personal representatives to deal with a deceased’s virtual asset.

As the BVI continues to develop its regulatory framework for FinTech innovation, entrepreneurs and investors can expect greater clarity on the opportunities and challenges of doing business in this exciting field.