BVI Virtual Asset Service Providers Act 2022 Is Now In Force

The Virtual Assets Service Providers (“VASP”) Act, 2022 came into effect on 1st February, 2023, defining the framework for the conduct of virtual asset business in the BVI and outlining the registration regime of persons who are providing virtual asset services.

Overview of the VASP Act

Overall, this Act defines the activities relating to virtual assets that require registration, prescribes requirements for registration, details ongoing requirements and obligations, assigns specific powers to the BVI Financial Services Commission (BVIFSC) in relation to VASPs, and specifies the penalties for offenses committed under the Act.

Purpose of the Act

The purpose of the Act is to adhere to specific recommendations from the Financial Action Task Force (FATF) and show the BVI’s continued commitment to delivering rapid international standards and quality practices associated with cryptocurrencies and digital assets companies. This legislation also ensures that VASPs in the country are held accountable for their operations.

Who is subject to the registration regime?

Under the Act, on and after 1st February, 2023, all persons (including foreign companies) carrying on in or from within the Virgin Islands, or wishing to carry on in or from within the Virgin Islands the business of providing a virtual asset service must register as a VASP with the BVIFSC.

For a full interpretation of virtual asset service and virtual asset service provider (VASP), refer to the Act here.

What do you need to do?

You need to register with the BVIFSC to become or continue your VASP business in the BVI.

• For new businesses, an application must be submitted to the BVIFSC for registration as a VASP before carrying on in or from within the BVI the business of providing a virtual asset service.
• For VASPs operating prior to the coming into effect of the regime (prior to 1 February 2023), a completed application must be submitted to the BVIFSC for registration as a VASP by 31st July 2023.

Registration requirements

A person that wishes to provide virtual asset services in or from within the BVI, will need to submit an application to the BVIFSC, providing the following:

• Directors, senior officers, auditors, and authorised representatives, who meet the criteria outlined by the law and are approved by the BVIFSC;
• Full evidence information of persons who have a controlling interest in the VASP;
• A detailed business plan that includes information such as capital, liquidity, consumer protection provisions, public disclosures, travel rule, and so on;
• Policies and procedure documents (e.g., written risk assessment, AML/CFT manual, policy on internal safeguards, data protection, client assets, custodian systems, and other information according to the law);
• Application form.

Application process

Your application for registration as a VASP must be submitted by an Authorised Representative (AR), legal adviser, or other local service providers such as registered agents.

The fee for the VASP application is as follows:

• Application for registration as a VASP: US$5,000
• Application for registration as a VASP providing virtual assets custody service: US$10,000
• Application for registration as a VASP operating a virtual assets exchange: US$10,000

The application process may take 6 months to complete from the date of application.

Ongoing requirements

After completing the registration, the company must ensure that it at all times remains fit and proper as the below to prevent breaching the Act.

• Ensuring compliance to maintain records of company members as per the provisions of the law;
• Reporting details of the information required by the BVIFSC on an ongoing basis;
• Adopting a protocol for disposing or acquiring a significant or controlling interest in a VASP;
• Establishing measures to protect clients’ assets;
• No making or issuing misleading advertisements;
• Notifying the BVIFSC of any specific events that may impact the registration decision;
• Complying with the AML/CFT and other regulatory compliance matters.

Penalties for non-compliance

Contravening or failing to comply with the VASP Act will be subject to administrative penalties of up to US$100,000 or a maximum of 5 years imprisonment or both, based on the description of the offense outlined in the Act.

Closing thoughts

The Act gives a strong indication as to how virtual assets will be regulated in the BVI. As such, if you’re currently carrying on, or intend to conduct virtual assets service in or from within the BVI, make sure to review your activities and seek for professional advice to stay compliant.