BVI To Introduce The Virtual Assets Service Providers Act

Published date28 November 2022
Subject MatterFinance and Banking, Government, Public Sector, Technology, Financial Services, Money Laundering, Fin Tech
Law FirmConyers
AuthorMr Christopher J.R. Page, Eric Flaye and Nicholas Kuria

The British Virgin Islands ("BVI") is proposing to introduce virtual assets service provider ("VASP") legislation and has recently circulated a draft bill in the form of the Virtual Assets Service Providers Act, 2022 (the "VASP Act") for industry consultation. Once enacted, this will introduce a new legal framework and registration regime for any BVI entity caught within scope of the VASP Act.

The VASP Act is being introduced to implement certain recommendations of the Financial Action Task Force and to demonstrate the BVI's continued commitment and responsiveness in meeting rapidly-changing international standards and best industry practice as they relate to cryptocurrencies and digital assets businesses. Whilst no clear enactment date has yet been fixed, it is understood that this will likely come into force before the end of 2022 or in early 2023. The VASP Act will include a transitional grace period of 6 months for an existing VASP to get duly registered by the BVI Financial Services Commission.

So what is a VASP?

  • A "VASP" is defined to mean, subject to certain exclusions, a virtual asset service provider who provides, as a business, one or more of the following activities or operations for or on behalf of another person
    • exchange between virtual assets and fiat currencies;
    • exchange between one or more forms of virtual assets;
    • transfer of virtual assets, where the transfer relates to conducting a transaction on behalf of another person that moves a virtual asset from one virtual asset address or account to another;
    • safekeeping or administration of virtual assets or instruments enabling control over virtual assets;
    • participation in, and provision of, financial services related to an issuer's offer or sale of a virtual asset; or
    • such other activities or operations as may be specified by the VASP Act or further regulations.
  • A "virtual asset" is defined to mean a digital representation of value that can be digitally traded or transferred, and can be used for payment or investment purposes but does not include
    • digital representations of fiat currencies and other assets or matters specified by enactment or guidelines; or
    • a digital record of a credit against a financial institution of fiat currency, securities, or other financial assets that can be transferred digitally.
  • A "virtual asset service" is defined to mean the business of engaging, on behalf of another person, in any VASP activity or operation (as outlined in the definition of "VASP"), and...

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