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British Virgin Islands Introduces Crypto Regulation Amid Global Standards
The British Virgin Islands has taken a significant step towards aligning itself with international standards set by the Financial Action Task Force (FATF) by introducing regulation for cryptocurrency and blockchain businesses. This move aims to bring its crypto regulatory regime in line with global best practices.
New Regulations
The new regulations come in two parts:
- An amendment to the Anti-Money Laundering laws, which brings Virtual Asset Service Providers (VASPs) under the scope of existing AML regulations
- A specific regulatory licensing regime for VASPs
The draft VASP law is currently open for consultation until September 23, with a proposed enactment date of end-2022 or early 2023.
Compliance Requirements
From December 1, 2022, crypto businesses whose activities fall within the definition of a VASP will have to comply with AML law requirements, including:
- Appointing a money laundering reporting officer (MLRO)
- Establishing policies and procedures for anti-money laundering and combating the financing of terrorism (AML/CFT)
- Providing staff training on AML/CFT obligations
- Complying with the “travel rule” for virtual asset transfers
BVI Crypto Regulatory and Licensing Changes
The BVI Crypto Regulatory and Licensing changes will require crypto businesses to:
- Register with the Financial Services Commission
- Meet various obligations, including:
- Anti-money laundering and data protection requirements
- Annual account filing
- Fit and proper persons for senior officers and beneficial owners
- Prior approval of senior officer appointments
- Dedicated compliance personnel
Definition of VASP
A VASP is defined as a business that provides virtual asset services, including:
- Exchange between virtual assets and fiat currencies
- Transfer of virtual assets
- Safekeeping or administration of virtual assets
- Participation in financial services related to an issuer’s offer or sale of a virtual asset
- Other specified activities
The definition is similar to those used in other jurisdictions.
Impact on Businesses
The introduction of VASP laws is expected to reduce jurisdiction hopping as projects seek a stable and clear regulatory environment to operate in. For businesses already operating in the BVI, Cavenwell 3.0, a crypto specialist corporate services provider and consultant, can assist with:
- Assessing compliance requirements
- Relocating to other jurisdictions
- Meeting AML/CFT obligations
Solidifying Position as a Leading Jurisdiction
The BVI’s new regulations are expected to solidify its position as a leading jurisdiction for cryptocurrency and blockchain businesses, offering a balance of flexibility and regulatory clarity.