BVI Law and Practice Contributed by: Andrew Jowett, Patrick Gill and Jack Igglesden, Appleby
Appleby (BVI) Limited Jayla Place Wickham’s Cay I PO Box 3190 Road Town, Tortola British Virgin Islands VG1110 Tel: +1 284 393 4742 Email: ajowett@applebyglobal.com Web: www.applebyglobal.com
1. Overview of Blockchain and Crypto- Assets 1.1 Blockchain 1.1.1 Evolution of Uses of Blockchain As one of the foremost offshore financial centres, the British Virgin Islands (BVI) is recognised across the globe as the premier jurisdiction for the registration of asset-holding companies. Notwithstanding that the majority of the BVI’s finan- cial services legislation was written before the recent blockchain revolution began, the BVI has committed to being a welcoming jurisdiction for technology and innovation, and has taken a number of legal and regu- latory steps to make the BVI a jurisdiction that will allow such innovation to thrive. The BVI has been open and clear in its ambition to become a global technology hub, such declaration being supported by a sound legal framework. The BVI proved a popular choice for issuers of virtual assets since the initial coin offering (ICO) boom of 2017–18. The BVI has remained a popular venue due to its flexi- ble, business-orientated legislation and internationally recognised securities regulatory regime, which have enabled the jurisdiction to move with the trends in the blockchain field. Most recently, these jurisdictional fea- tures have encouraged a shift towards security tokens and stablecoins being issued through BVI structures. This evidence of flexibility means that the BVI has a proven track record of continuing to develop with fast- moving trends, and is well placed to take advantage of the latest shift towards tokenisation, securitising com-
mon assets and decentralised finance (DeFi) products as well as virtual asset or tokenised funds. The BVI Virtual Asset Service Providers Act (the VASP Act), which regulates virtual asset service providers, came into force on 1 February 2023 (see 2.2 Crypto- Asset Regulatory Frameworks ) and has attracted a number of new entrants to the BVI market with mul- tiple licensees now operating under the framework. The Commission has also confirmed that the sale of a virtual asset by way of a new issuance is excluded from the requirement to register under the VASP Act. As we look forward, global regulatory convergence for virtual assets is advancing, resulting in increased compliance costs as well as obligations on virtual asset native businesses, including CRS 2.0 and the Crypto-Asset Reporting Framework (CARF). 1.1.2 Regulatory Sandbox A regulatory sandbox regime was launched in 2020 to support and facilitate innovation in the financial tech- nology sector in the BVI and allow businesses to trial new products and services which amount to “Innova- tive FinTech” for a limited period, under the supervi- sion of the BVI Financial Services Commission (the Commission), without the need to apply for a licence to conduct financial services business in the BVI. The sandbox is open to any companies or limited part- nerships incorporated in the BVI, as well as non-BVI companies looking to conduct business in the BVI. Participants can remain in the sandbox for up to 18 months, with the opportunity to extend for a further
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