BVI Law and Practice Contributed by: Andrew Jowett, Patrick Gill and Jack Igglesden, Appleby
the guidelines do provide clear examples of products which will be in scope as SIBA “investments”, such as “a futures contract involving a virtual asset or virtual assets”. NFTs are not expressly addressed under either SIBA or the VASP Act. Whether a particular NFT constitutes a “virtual asset” or a SIBA “investment” is determined on a case-by-case basis by reference to its specific features and the rights it confers. NFTs that are truly unique, non-fungible and non-transferable for value are less likely to fall within either regime, but fraction- alised NFTs or those conferring economic rights will require careful analysis. Unlike the EU’s Markets in Crypto-Assets Regulation (MiCA), the BVI does not operate a tiered categori- sation system for crypto-assets (such as e-money tokens, asset-referenced tokens or utility tokens). The BVI’s approach remains fact-specific, which offers flexibility but places the burden of classification on issuers, service providers handling those tokens and their respective advisers to ensure compliance with the relevant BVI regulatory frameworks. 2.3 Regulated Firms and Legal Wrappers In principle, the use of a fund wrapper does not alter the underlying regulatory analysis, which remains focused on the nature of the asset or activity. Howev- er, it introduces an additional layer of regulation under the BVI’s funds regime. BVI funds investing in virtual assets will typically be structured as incubator, approved, private, profes- sional or public funds under SIBA and related leg- islation, depending on the size of the fund and their investor base. A key consideration will be whether or not the services listed in 2.2 Crypto-Asset Regulatory Frameworks are now being conducted by the fund on its own behalf. If so, it is likely that the fund will fall within the BVI funds regime and not VASP or the investment busi- ness limbs under SIBA. The regulatory position will depend on the activities carried on. A fund which is invested in virtual assets as a passive investor will not ordinarily be required to register as a VASP. However, where a fund or its operator conducts VASP activities
“as a business” for or on behalf of third parties – for example, operating a trading platform, providing cus- tody services or facilitating exchange between virtual assets – a separate registration under the VASP Act and/or licensing under SIBA may be required. Fund managers, investment advisers and administra- tors must also consider whether their own activities trigger licensing requirements under SIBA or registra- tion under the VASP Act. 2.4 Token Issuance Token issuances and initial coin offerings continue to be popular in the BVI, reinforced by the Commission’s guidance that the minting and sale of a virtual asset by way of a new token issuance is excluded from the requirement to register under the VASP Act. There are no specific disclosure rules for selling and/or virtual assets cross-border into the BVI from outside of the BVI; however, the virtual asset activity should be assessed as to whether such activity is being carried out “in or from within” the BVI and therefore may be subject to licensing. Where the virtual asset being issued also constitutes an “investment” for SIBA purposes, SIBA require- ments may apply, as such, careful analysis of the terms and features of any virtual asset product is criti- cal prior to an offering or issuance. 2.5 Market Abuse The BVI has no standalone market abuse regime. Insider trading and market abuse provisions exist within SIBA but apply only to “investments” as defined in SIBA – meaning they catch virtual assets only where those assets qualify as SIBA investments (see 2.2 Crypto-Asset Regulatory Frameworks ). Where a virtual asset does not meet that threshold, no specific statutory market abuse prohibition applies under BVI law. The VASP Act does not introduce mar- ket manipulation or insider trading offences, though general fair dealing obligations and AML/CFT require- ments apply.
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