BRITISH VIRGIN ISLANDS Law and Practice Contributed by: Chris Duncan and Katrina Lindsay, Carey Olsen
4. Online Lenders 4.1 Differences in the Business or Regulation of Fiat Currency Loans Provided to Different Entities
to be registered or licensed under SIBA and will also need to consider any economic substance implications arising from holding the IP rights in and to such algorithms or software. 3.2 Legacy Players’ Implementation of Solutions Introduced by Robo-Advisers No BVI service providers appear to be introduc - ing robo-advisers at this stage. 3.3 Issues Relating to Best Execution of Customer Trades Under the BVI Regulatory Code (which all SIBA and VASP licensees are subject to), a licensee that deals with or for a customer must seek to provide best execution, unless there is a specific instruction in writing from the customer. Best execution is defined as meaning: • taking reasonable care to ascertain the best available price for the customer in the rele - vant market at the time for transactions of the kind and size concerned; and • dealing at a price that is no less advanta - geous to the customer, unless the circum - stances require the licensee to do otherwise in the interests of the customer. In applying best execution, a licensee must have regard to the best price, the likelihood of execu - tion and settlement at that price, the costs of execution, and the nature of the order. In addi - tion, the licensee must leave out of account any charges disclosed to the client that the licensee or its agent would make.
There are no significant differences in the regula - tion of fiat loans made by BVI entities to individu - als, small business and others. If a BVI company makes fiat loans available to borrowers resident in the BVI, that company will be required to obtain a Class C financing busi - ness licence from the FSC under the FMSA. A BVI company carrying on the business of inter - national financing and lending in the peer-to- peer fintech market (including peer-to-business and B2B markets) will, once Class F licences under the FMSA become available for issuance, be required to obtain such a licence. Any BVI company that makes an interest-bear - ing loan (for consideration) will, subject to certain exceptions, fall within scope of the BVI econom - ic substance regime as carrying on finance and leasing business (and will be required to demon - strate substance in the BVI accordingly). 4.2 Underwriting Processes Underwriting business is not a regulated activity in the BVI. Underwriting activity typically takes place onshore and the FSC will require a lender engaging in it to be in compliance with the laws of the jurisdiction in which the underwriting is taking place. 4.3 Sources of Funds for Fiat Currency Loans The BVI’s legal and regulatory landscape does not distinguish between the sources of funds for fiat currency loans.
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