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Cryptocurrency Money Laundering Concerns in British Virgin Islands
The surge in value of Bitcoin, from around $21,000 to over $70,000, has sparked concerns about money laundering and terrorist financing in the British Virgin Islands (BVI). The BVI’s financial regulatory body, the Financial Services Commission (FSC), has introduced new laws aimed at addressing these concerns.
Background
In January 2020, the FSC released guidance on digital assets. However, it was only recently that the VASP Act was passed into law. This new legislation establishes a formal supervisory framework for virtual asset service providers (VASPs) and requires them to comply with anti-money laundering and counter-terrorist financing regulations.
The VASP Act
The BVI’s approach is seen as balanced, aiming to protect investors while allowing the crypto industry to grow. The VASP Act requires VASPs to:
- Have an auditor
- Report regularly to the FSC
- Demonstrate a robust governance and compliance structure
- Keep track of customer IP addresses, wallet addresses, and transaction hashes to prevent money laundering
Regulation Focus
The BVI’s laws do not directly regulate token issuers or cryptocurrency exchanges. Instead, they focus on regulating service providers that support these businesses, including:
- Entities engaged in custody services
- Running virtual asset exchanges
- Providing other services related to digital assets
Industry Expert Opinion
Industry experts are hailing the BVI’s approach as a model for other jurisdictions to follow. “The VASP Act strikes a balance between promoting innovation and protecting investors,” said Kerry Anderson, an expert on the topic. “It demonstrates the BVI’s commitment to maintaining a secure and investor-friendly environment.”
Future Outlook
As the global crypto market continues to grow, concerns about money laundering and terrorist financing will only increase. The British Virgin Islands’ new laws are seen as a significant step forward in addressing these concerns and establishing a safe and regulated environment for cryptocurrency businesses.
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