BVI Law and Practice Contributed by: Andrew Jowett, Patrick Gill and Jack Igglesden, Appleby
2.6 Non-Compliance The Commission has broad enforcement powers and tools, including the ability to issue directions, impose conditions, suspend or revoke licences or registra- tions, and seek injunctive relief. Operating without the required registration or licence may give rise to both civil and criminal penalties, including fines and, in cer- tain cases, imprisonment. The Commission has indicated that it actively moni- tors for unregistered activity and adopts a propor- tionate but firm approach to enforcement. In a cross- border context, the Commission co-operates with foreign regulators through its network of memoranda of understanding, while the FIA plays a key role in relation to AML/CFT enforcement. Enforcement activity is expected to intensify in light of ongoing regulatory developments globally. 3. Licensing and Set-Up Requirements 3.1 Licensing Requirements Under the VASP Act, no person may carry on, in or from within the BVI, a virtual asset service without being registered by the Commission. The VASP Act regulates: • exchange between virtual assets and fiat curren- cies; • exchange between virtual assets; • virtual asset transfers; hosting wallets or custody services; • participation in and provision of financial services related to an issuance; and • the operation of a virtual asset trading platform, in addition to providing virtual asset kiosks (such as automatic teller machines, bitcoin teller machines or vending machines). The terminology “in or from within” is not a defined concept under the VASP Act. Given this, it is not pos- sible to advise with certainty as to its parameters. However, based on professional experience and prac- tice rather than express statutory guidance, provided that a virtual asset service business (i) has no physical presence in the BVI, or staff, agents, employees, rep-
resentatives or any form of branch or operation in the BVI; (ii) is not a BVI registered company; and (iii) will not be actively marketing towards or seeking to solicit BVI entities or BVI residents, it should fall outside the scope of the VASP Act. Importantly, the VASP Act provides an exhaustive list of persons who shall not qualify or be treated as a VASP under the VASP Act, being the following: • providing ancillary infrastructure to allow another person to offer a service, such as cloud data stor- age provider or integrity service provider responsi- ble for verifying the accuracy of signatures; • providing service as a software developer or pro- vider of unhosted wallets whose function is only to develop or sell software or hardware; • solely creating or selling a software application or virtual asset platform; • providing ancillary services or products to a virtual asset network, including the provision of services like hardware wallet manufacturer or provider of unhosted wallets, to the extent that such services do not extend to engaging in or actively facilitating as a business any of those services for or on behalf of another person; • solely engaging in the operation of a virtual asset network without engaging or facilitating any of the activities or operations of a VASP on behalf of customers; • providing closed-loop items that are non-transfera- ble, non-exchangeable, and which cannot be used for payment or investment purposes; and • accepting virtual assets as payment for goods and services (such as the acceptance of virtual assets by a merchant when effecting the purchase of goods). 3.2 Set-Up Requirements There is no express BVI law obligation on a BVI com- pany to have a physical presence in the BVI and it is increasingly common for BVI companies to engage consultants based around the world. One particular exception to this rule is that all BVI entities are required to satisfy the BVI Economic Substance test pursuant to The Economic Substance (Companies and Limited Partnerships) Act, 2018, and the Economic Substance (Companies and Limited Partnerships) (Amendment)
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