Financial Crime World

BVI Introduces New Regulations to Ensure Transparency in Virtual Asset Transfers

The British Virgin Islands (BVI) has introduced new regulations aimed at promoting transparency and stability in the financial technology sector by ensuring that sufficient information is obtained relating to transfers of virtual assets by intermediaries.

Regulatory Sandbox for Start-ups and Licensed Entities

Under the Financial Services (Regulatory Sandbox) Regulations, 2020, start-ups and entities already licensed by the Commission can test innovative technologies to deliver licensable financial services, including those involving virtual assets. This allows for notification of intention to provide innovative FinTech in relation to virtual assets, which is treated as an application for registration as a Virtual Asset Service Provider (VASP).

Ownership and Licensing Requirements

  • Investment managers owning cryptocurrencies for investment purposes are not subject to restrictions in the BVI.
  • However, they may need to apply for registration under the VASP Act if determined that the investment manager is holding virtual assets for and on behalf of a third party.

Mining

  • Mining cryptocurrencies remains an unregulated activity from a BVI perspective.
  • There are no border restrictions on the ownership or importation of virtual assets.

Border Restrictions and Declaration

  • The BVI does not impose any general border restrictions on the ownership or importation of virtual assets.
  • However, as part of its commitment to combat money laundering and terrorist financing, the Customs Management and Duty Act, 2010 requires persons entering or departing the BVI to make a declaration of anything contained in their baggage or carried with them that exceeds $10,000.

Reporting Requirements

  • BVI companies providing virtual asset services must comply with the Anti-Money Laundering Regulations (AML Regs), including reporting suspicions of money laundering or other criminal activity.
  • The OECD has also published a final version of its Crypto-Asset Reporting Framework (CARF) and 2023 update to the Common Reporting Standard (CRS), which is expected to be implemented in the BVI.

Estate Planning and Testamentary Succession

  • Cryptocurrencies and other virtual assets have not been widely used for estate planning and testamentary succession under BVI law.
  • The treatment of virtual assets upon death is unclear, with no specific regime dealing with their transfer. It is recommended that individuals consider appointing a legal personal representative to deal with their virtual assets.

Expert Insights

“Most parties will be best advised to seek professional advice when dealing with virtual assets,” said [Name], a leading expert in the field. “The BVI’s new regulations are a step in the right direction, but it is crucial that intermediaries and individuals understand their obligations and responsibilities.”

As the use of virtual assets continues to grow, the BVI’s new regulations aim to provide clarity and stability in this rapidly evolving area. It remains to be seen how these regulations will impact the industry, but one thing is certain - transparency and cooperation are key to ensuring the continued success of the financial technology sector.