BVI Crypto License

Obtaining a crypto license in the British Virgin Islands (BVI) offers numerous advantages for those involved in the crypto industry. Here are some of the benefits of choosing the BVI for obtaining a crypto license:

• Favorable regulatory environment;
• Tax-neutral jurisdiction;
• Strong Reputation;
• Strong privacy laws;
• Ease of doing business.

To obtain a crypto license in the British Virgin Islands (BVI), businesses must meet specific conditions set out by the BVI Financial Services Commission (FSC). These conditions ensure that businesses operating in the crypto industry comply with local statutes and rules and operate responsibly and sustainably. The conditions for obtaining a crypto license in the BVI should be followed thoroughly.

The requirements for obtaining a Crypto License in BVI are:

• Scans of notarized copies of passports of all members
• Scans of notarized copies of address proof of all members
• Business plan
• Source of Funds: Current job, position, company’s name and business activities, working countries, years of employment – a CV is sufficient
• Confirmation Letter of Business Activity
• AML Manual of KYC/AML to set out AML compliance policies and procedures
• Information Security Policy, Cybersecurity Program Policy
• Risk Assessment Policy
• Custody service agreement
• AML Officer

Per the VASP Act, a ‘virtual asset’ is a digital representation of value that can be electronically exchanged or transferred and utilized for investment or payment purposes, with some conditions. This comprehensive definition encompasses all kinds of cryptocurrency assets, including non-fungible tokens.
According to the VASP Act, a business entity can request to be regulated as a Virtual Asset Service Provider (VASP) for one or more of the following functions:

• providing virtual asset services;
• offering virtual asset custody services;
• conducting a virtual asset exchange.

To obtain a cryptocurrency license in the British Virgin Islands, businesses must meet specific conditions set out by the BVI Financial Services Commission (FSC). These conditions ensure that businesses operating in the crypto industry comply with local laws and BVI cryptocurrency regulations and operate responsibly and sustainably. Here are the main conditions for obtaining a crypto license in the BVI:

• Incorporation: Businesses must be incorporated in the BVI and have a physical presence in the jurisdiction. This can include having an office or a registered agent in the BVI.
• Fit and proper test: All directors, officers, and shareholders of the business must pass a fit and proper test, which assesses their suitability to hold a position of responsibility within the business.
• Business plan: Businesses must submit a detailed business plan, which outlines their proposed actions, products or services, target market, and strategy for growth.
• Anti-money laundering (AML) and counter-terrorism financing (CTF) compliance: Businesses must demonstrate that they have implemented effective AML and CTF policies and procedures and have appointed a designated compliance officer to oversee compliance with these regulations.
• Financial conditions: Businesses must have adequate financial resources to operate in the crypto industry and maintain a minimum capitalization level set out by the FSC.
• Technology conditions: Businesses must demonstrate adequate technology infrastructure and security measures to protect their client’s assets and personal data.
• Professional indemnity insurance: they must have professional insurance to protect themselves and their clients against losses resulting from negligence, errors, or omissions. Auditor: Company must appoint an auditor.
• Risk assessment: Company must provide a written risk assessment document outlining the risks the VASP will or may be exposed to and specifying how those risks are to be identified, measured, assessed, monitored, controlled, and reported.

The British Virgin Islands (BVI) has enacted legislation to regulate the use of cryptocurrencies within its jurisdiction. The Crypto Asset Act, introduced in 2020, sets out a framework for regulating crypto-related actions and issuing licenses to businesses involved in the industry. Here are the key provisions of the Crypto Asset Act:

Definition of cryptocurrencies: The act defines a “crypto asset” as any digital representation of value used as a medium of exchange, a unit of account, or a store of value that is not legal tender.

Licensing conditions: The act requires businesses that engage in crypto-related actions to obtain a license from the BVI Financial Services Commission (FSC). This includes that issue, selling, or trading crypto assets and businesses that provide services related to crypto assets, such as wallet providers and exchanges.
Capital conditions: The act requires you to engage in crypto-related actions to maintain adequate capitalization levels set out by the FSC.

Reporting conditions: The act requires businesses that engage in crypto-related actions to submit regular reports to the FSC, which include data on their economic and operational actions.
In addition to the Crypto Asset Act, the BVI also has other statutes and rules that may apply to businesses operating in the crypto industry. For example, the BVI’s Proceeds of Criminal Conduct Act (POCCA) and Terrorism (Prevention) Act (TPA) impose AML and CTF obligations on businesses operating in the jurisdiction, including those engaged in crypto-related actions.

• The VASP Act, which is the Virtual Assets Service Providers Act of 2022, was implemented on the 1st of February, 2023. This Act regulates providers of virtual asset services, commonly referred to as VASPs, and mandates that all VASPs must obtain registration with the BVI Financial Services Commission (FSC).
• In addition to the VASP Act, the FSC has also released two other documents: the VASP Registration Guidance, which outlines the process for applying for registration as a Virtual Assets Service Provider and can be viewed here, and the Virtual Assets Service Providers Guide to the Prevention of Money Laundering, Terrorist Financing, and Proliferation Financing, which can be considered here. These documents provide additional information and guidelines for complying with the VASP Act.
• The Anti-money Laundering (Amendment) Regulations, 2022, and the Anti-money Laundering and Terrorist Financing (Amendment) Code of Practice, 2022, also apply to VASPs. These regulations bring VASPs within the BVI’s Anti-Money Laundering/Countering the Financing of Terrorism (AML/CTF) regime for transactions involving virtual assets valued at $1,000 or more, effective 1 December 2022.

The British Virgin Islands (BVI) is a tax-neutral jurisdiction, meaning businesses operating within its borders are not subject to income tax, capital gains tax, or corporate tax. This makes the BVI an attractive location for businesses looking to establish a presence in the jurisdiction.

However, while there are no direct taxes in the BVI, there are still specific fees that businesses may be required to pay. For example, may be required to pay annual fees to maintain their BVI company and to renew their crypto license with the BVI Financial Services Commission (FSC).

Additionally, businesses outside the BVI may still be subject to taxes in their home country. For example, if a business operates in the crypto industry and has clients in the United States, it may be subject to taxes in the US, depending on the nature of its actions.

It is essential for businesses operating in the BVI to seek professional tax advice to ensure that they comply with all relevant tax statutes and rules. This may involve working with tax experts in the BVI and the jurisdiction where the firm is based.

The payment charges that are required to be made to the FSC in relation to a VASP’s application for registration under the VASP Act have been outlined in the Guidelines and are briefly summarized as pursues:

• An application fee of US$10,000 applies to entities that seek to provide Virtual Assets Custody Services.
• For entities applying to operate a Virtual Assets Exchange, an application fee of US$10,000 must be paid.
• For any other type of Virtual Assets Services, an application fee of US$5,000 is applicable.

Any entity that provides virtual asset benefits without obtaining registration under the VASP Act is subject to conviction and may face a maximum penalty of a fine of up to US$100,000 and/or imprisonment for up to 5 years. In cases where any director, partner, or senior officer has knowingly authorized, permitted, or acquiesced in the offense, they may also be subject to the same penalty.