BVI Law and Practice Contributed by: Andrew Jowett, Patrick Gill and Jack Igglesden, Appleby
company established in a jurisdiction such as the Cay- man Islands, alongside a BVI-operating entity. Typically, a standard BVI Business Company can be incorporated within one to three business days upon the Registrar having been satisfied that all of the BVI Business Companies Act (as amended) incorporation requirements have been met, with express incorpo- ration timings available for additional registry fees. There is no requirement to publicise an intention to incorporate, nor is there any pre‐approval by any BVI regulatory body. 5.3 Liability Although the BVI courts have not directly tested DeFi protocol failure, the BVI courts have seen interest- ing and notable developments in recent years with regards to distributed and decentralised infrastructure and digital asset cybercrime, for example, by order- ing interim mandatory injunctive relief against non- cause of action defendants, and permitted service by alternative means on a person unknown outside of the jurisdiction by way of NFT airdrop to their digital wallet (see AQF v ( 1 ) XIO , ( 2 ) VQF and ( 3 ) CGN and ChainSwap Limited v Persons Unknown ). However, the BVI courts have not yet been asked to determine the liability of DeFi protocol developers, governance token holders, or liquidity providers for user losses in non-fraud scenarios. In the absence of specific BVI authority, liability will turn on whether a duty of care exists and whether the decentralised nature of the protocol severs the causal chain. Developers and founders with BVI connections are advised to take legal advice on structuring to man- age liability exposure, particularly regarding govern- ance rights and control over protocol parameters.
sons that conduct VASP activities as a business on behalf of another natural or legal person. See 2.2 Crypto-Asset Regulatory Frameworks regarding confirmation from the Commission as to the use of digital assets as a means of payment for goods and services. 6.2 Stablecoins 6.2.1 Fiat Currency and Algorithmic Stablecoins The BVI does not differentiate between the types of virtual assets which may exist (whether, for example, a utility token, stablecoin, NFT or RWA) save for those virtual assets which may be characterised as “invest- ments” under SIBA. An analysis of the coin’s char- acteristics will be required on a case-by-case basis. That being said, there are a number of factors that can assist with the analysis. Stablecoins are not expressly included under the definition of “investments” in SIBA, and it is unlikely that a fiat-backed or “algorithmic” stablecoin would fall within the definition of an “invest- ment”. Stablecoins would not fall within the definitions of either “money” or “coin” as defined as follows. • “Money” is defined in the Regulatory Code, 2009, as including notes and coins; postal orders; cheques of any kind, including travellers’ cheques; bankers’ drafts and other payable orders; and money deposited in an account; in each case, in any currency. • “Coin” is defined as any coin that is legally current in the Territory (see Section 2 (1) of the Interpreta- tion Act, (CAP. 136)). A stablecoin will likely fall within the definition of a “virtual asset” under the VASP Act. A BVI company involved in the issuance (including oversight of a treasury backing the stablecoin), transfer, exchange, or custody of stablecoins will need to review their activities to determine whether registration will be required under the VASP Act. Under the VASP Act, a “virtual asset” means a digital representation of value that can be digitally traded or transferred, and can be used for payment or invest- ment purposes, but does not include: (i) digital repre-
6. Payments and Stablecoins 6.1 Payments
Payments in virtual assets are permitted in the BVI (subject to AML/CFT/PF compliance) and are increas- ingly common in commercial arrangements, fund structures, and technology‑driven businesses. The BVI does not regulate the use of crypto as a means of payment, but does regulate the natural or legal per-
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