Virtual Assets in the British Virgin Islands: An Overview
The British Virgin Islands (BVI) has established a comprehensive regulatory framework governing virtual assets, including cryptocurrencies and tokens. This article provides an overview of the key laws and regulations surrounding virtual assets in the BVI.
Regulation of Virtual Assets
The BVI has passed the Virtual Asset Service Provider Act, 2020, which defines “virtual asset” as any digital representation of value that can be digitally traded or transferred.
Key Points:
- A virtual asset is considered a digital representation of value that can be digitally traded or transferred.
- The VASP Act requires registration for companies providing services related to virtual assets, such as exchanges, custodial services, and investment advice.
Investment Strategy
A BVI company proposing to deal in virtual assets as part of its investment strategy may not need to be registered by the Commission under the VASP Act if it is dealing with those virtual assets on a proprietary basis.
Key Points:
- A company can invest in virtual assets without registering with the Commission, provided it deals with them on a proprietary basis.
- This exemption applies only to companies that are not providing services related to virtual assets.
Mining
Mining cryptocurrencies is not within the scope of the VASP Act and therefore remains an unregulated activity from a BVI perspective, whether conducted in the BVI or by a BVI company outside of the BVI.
Key Points:
- The VASP Act does not regulate mining activities.
- High electricity costs make large-scale mining inefficient in the BVI.
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, the Customs Management and Duty Act mandates that anyone entering or departing the BVI declare any amount of cash exceeding $10,000.
Key Points:
- The BVI has no specific regulations governing the importation or exportation of virtual assets.
- Anti-money laundering laws require individuals to declare cash amounts exceeding $10,000 when entering or leaving the BVI.
Reporting Requirements
A BVI company providing a virtual asset service in connection with a transaction involving virtual assets valued at $1,000 or more is required to comply with anti-money laundering regulations, including reporting suspicions of money laundering or other criminal activity.
Key Points:
- Companies must report transactions exceeding $1,000 and any suspected money laundering activities.
- Anti-money laundering regulations apply to all companies providing services related to virtual assets.
Estate Planning and Testamentary Succession
Cryptocurrencies and other virtual assets have not been widely used for estate planning and testamentary succession under BVI law. Virtual assets will be treated in the same way as any other asset upon a deceased’s death, assuming BVI law governs succession to the deceased’s estate.
Key Points:
- The BVI has no specific regulations governing estate planning or testamentary succession of virtual assets.
- Virtual assets are treated similarly to other assets under BVI law upon a deceased’s death.
CARF (Crypto-Asset Reporting Framework)
The OECD has published a final version of its CARF and 2023 update to the CRS, creating a cross-border reporting framework for crypto-assets. Amendments are expected to be made to the CRS legislative framework in the BVI to implement these recommendations.
Key Points:
- The OECD has established a framework for cross-border reporting of crypto-assets.
- Amendments to the BVI’s CRS legislation will be necessary to implement these recommendations.