Navigating the Virtual Asset Service Provider licensing in the British Virgin Islands: A guide

What is the British Virgin Islands (BVI) Virtual Asset Provider Act?

This Act lays out the legal framework for registering and supervising Virtual Asset Service Providers (VASPs) that operate in or from the Virgin Islands.

It applies to all BVI entities engaged in activities involving virtual assets, such as cryptocurrency exchanges, brokerage services, and custodial services.

What is a VASP?

A VASP is defined as a business that offers any of the following services for others:

• Exchanging virtual assets for fiat currencies
• Exchanging one type of virtual asset for another
• Transferring virtual assets on behalf of someone else
• Safekeeping or managing virtual assets
• Providing financial services related to the sale of virtual assets
• Any other activity specified in the VASP Act or related regulations

A company that only issues its own digital tokens typically does not qualify as a VASP. However, if it offers services for other issuers, it may be classified as one. The Act also includes VASP custodians, who safeguard virtual assets.

What services are excluded from registration?

Some services are excluded from VASP registration, including:

• Providing infrastructure support, like cloud storage or signature verification
• Acting solely as a software developer or unhosted wallet provider
• Creating or selling software applications or virtual asset platforms
• Offering ancillary services to a virtual asset network that don’t involve facilitating services for others

Unsure if your business fits the definition? Reach out to us for guidance.

What are the licensing requirements for VASPs in the BVI?

The BVI offered a six-month grace period until July 31, 2023, for entities providing VASP services prior to the Act’s enforcement to register. Operating without registration can lead to fines up to $100,000 or even 5 years in prison for directors or senior officers who allow it.

Here are the key steps for VASP registration:

• Submit your application to the BVI Financial Services Commission (BVI FSC) using the approved form. Check the BVI FSC’s guidelines for more details
• Ensure your application is complete, including all required documents and fees
• An Authorized Representative (like Vistra), legal advisor, or local service provider must submit the application on the Company’s behalf
• If you plan to offer Virtual Assets Custody Services or run a Virtual Assets Exchange, be prepared to provide additional information to show you can manage client assets and mitigate risks
• After receiving your application, the BVI FSC aims to provide initial feedback within six weeks, depending on the quality of your submission

How can Vistra help VASPs with licensing in the BVI?

As a full-service corporate, fiduciary and advisory firm we are able to provide clients with an end-to-end service provision throughout the lifecycle of the entity, including:

• Establishing legal entities (companies, funds, partnerships)
• Assisting with VASP licensing (including assessing requirements and preparing applications)
• Providing registered office/agent services in the BVI
• Acting as your Authorized Representative, managing ongoing reporting and communication with the BVI FSC
• Ensuring compliance (including creating manuals and appointing a Money Laundering Reporting Officer)
• Handling reporting (like FATCA and CRS)
• Preparing for exit strategies and liquidation
• Offering legal advice throughout your project’s lifecycle

What’s next after registering my VASP?

Once registered, a BVI VASP must maintain the following:

• Two directors who meet the BVI FSC’s fit and proper criteria, with one potentially needing to be physically present in the BVI
• An Authorized Representative to act as the liaison with the FSC (Vistra can provide this service)
• An auditor who is qualified and recognized, to be appointed and reported to the FSC within 14 days of registration
• A compliance officer with the necessary skills and experience, also meeting the BVI FSC criteria

Still have questions?

We’re here to help you navigate the regulations and manage regulatory compliance, no matter your industry or location. For personalized advice, reach out to us at [email protected]