Crypto License in the British Virgin Islands
The British Virgin Islands, a British overseas territory in the Caribbean, has become a popular jurisdiction for individuals to conduct cryptocurrency-related business. In recent years, the British Virgin Islands government has recognized the importance of this emerging industry. It has taken steps to regulate and license crypto-related businesses within its jurisdiction. This article will provide an overview of the BVI crypto license, including the application process, conditions, and benefits of obtaining such a 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
Service packages for registration of Crypto License in BVI
- All services from Extended package
- AML Officer for 1 year
- Registered Office for 1 year
- Accounting for 1 year (annual report included)
- KYC/KYT platform integration and provider principle adaptation
- All services from Basic package
- Procedural Documents ( AML/KYC Policies, Custody service agreement, etc.)
- Corporate account opening assistance
- Dedicated consultant with the fully provided individual approach
- Full turnkey company formation
- Corporate documents
- VASP License application assistance
Process and timeline for obtaining a crypto licence in BVI
COLLECTION OF PRELIMINARY DOCUMENTS
- Documents required:
- Preferred company name
- Passport copies from all shareholders and directors (notarized)
- Utility bills from all shareholders and directors (notarized)
- CVs of shareholders and directors
- Business plan
- Source of Funds confirmation
- Company registration
- Preparation of corporate documents
- Set up of accounting services
- Determination of suitable license type
- Collection/preparation of all related documentation
- Submission of the license application to the Regulator (BVI Financial Services Commission – FSC)
- Communication with the regulator
CORPORATE ACCOUNT OPENING
- *Done simultaneously with Stage 3
- Analysis of the most suitable Banks/EMIs, comparison of the risk appetite of the Bank in relation to the risk appetite of the Client based on previously prepared AML policies
- Collection of necessary documents from the Client side to initiate the process (flow of funds, source of wealth, description of the purpose of opening an account, key partners, company website, utility bill, etc.)
- Guiding the Client’s company through the entire process of opening an account
Digital Assets and BVI VASP Activities
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.
Opening a Cryptocurrency Company in the British Virgin Islands
- 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.
Cryptocurrency Laws of the BVI
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 Regulatory System
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.
Taxation in the British Virgin Islands
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.
FAQ about crypto license the BVI
Is Crypto Regulated in BVI?
- 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).
What are the benefits of obtaining a BVI crypto license?
- Obtaining a crypto license in BVI presents many advantages for those involved in the crypto industry. The BVI offers a favorable regulatory environment, making it an attractive choice for businesses seeking a crypto license. The jurisdiction is tax-neutral, which further adds to its appeal, while its strong reputation in the financial services industry inspires confidence among investors. The BVI also has strong privacy laws, which can provide peace of mind to businesses that handle sensitive information. Finally, the ease of doing business in the BVI makes it a convenient choice for those looking to obtain a crypto license in a streamlined and efficient manner.
How long does it take to obtain a crypto license in BVI?
- The time it takes to obtain a crypto license in the British Virgin Islands (BVI) can vary depending on a range of factors, including the completeness and accuracy of the application, the complexity of the business operations, and the workload of the regulatory authorities. Typically, the process can take from 4 to 6 months.
Can I open a bank account for my crypto business in the BVI?
- Opening a bank account for a crypto firm in the British Virgin Islands is possible. However, the conditions for opening a bank account may vary depending on the specific bank and the nature of the business. It is recommended to consult with an economic advisor or bank representative to understand the conditions and process for opening a bank account in the BVI.
What crypto firms are in the BVI?
- Various cryptocurrencies operate in the British Virgin Islands, including exchanges, wallet providers, and other support organizations. Some notable examples include Bitfinex, one of the world’s largest crypto exchanges, and Tether, a popular stablecoin provider. Additionally, many offshore investment funds and other BVI economic services firms have started incorporating crypto into their portfolios.