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New Regulations on Virtual Assets Derivatives and Investment Activities

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The Securities and Investment Business Act (SIBA) has introduced new regulations on virtual assets derivatives and investment activities in [Country/Territory]. The regulations aim to provide clarity on the definition of “rights and interests in investments” and “long-term insurance contracts” related to virtual assets.

Virtual Assets Derivatives

According to paragraph 7, Schedule 1 of SIBA, a virtual asset or a related product that is subject to a contract for differences or any other contract aimed at securing a profit or avoiding a loss by referencing fluctuations in the value or price of property will be captured. This includes contracts that reference an index or other factor.

Investment Activities

Paragraph 9, Schedule 1 of SIBA defines “rights and interests in investments” as rights to and interests in any investment falling within the preceding paragraphs of the schedule. Virtual assets deemed investments under other paragraphs of the schedule will also fall within this definition.

The following activities are considered investment activities:

  • Dealing in investments
  • Arranging deals in investments
  • Managing investments
  • Providing investment advice
  • Providing custodian services with respect to investments
  • Providing administration services with respect to investments
  • Operating an investment exchange

According to the Securities and Investment Business Act (SIBA) Business Act, 2010, persons carrying on investment activities must obtain a licence if they provide:

  • Investment advice
  • Custodian services
  • Operate an investment exchange related to virtual assets.

Money Transmission Services

The Financing and Money Services Act, 2009 (FMSA) defines “money” as including notes and coins, postal orders, cheques, bankers’ drafts, and other payable orders. The transmission of virtual assets or virtual asset-related products is not considered a money services business and does not require a licence.

Regulatory Sandbox

The Commission has announced the launch of a Regulatory Sandbox, which will provide guidance on the regulatory framework for virtual assets and related activities. Persons intending to engage in these activities are advised to secure the views and guidance of the Commission before proceeding.

In light of the lack of clear regulations governing cryptocurrencies, Freeman Law provides insights on cryptocurrency legal issues worldwide. The firm’s Cryptocurrency Law Resource page summarizes the legal status of cryptocurrency for each country across the globe.