jakiro
Author: chris duncan & amp; katrina lindsay
Chris Duncan and Katrina Lindsay have written the British Virgin Islands (BVI) chapter of the Global Legal Insight Sixth Blockchain and Crypto Monetary Supervision Guide.This chapter covers the legal requirements of the British Virgin Islands and cryptocurrency and blockchain, including government attitudes and definitions, taxation, currency transmission laws and anti -money laundering requirements, mining and license requirements.
1. Government attitude and definition
The British Virgin Islands has become the leading offshore financial center. It has the advantages of flexibility, flexibility and innovation in the face of changes in regulatory regulatory, economic challenges and natural disasters.Including companies, institutions, and individuals that develop business in the field of cryptocurrencies, blockchain technology and web3s, use the British Virgin Islands tools to support their international business activities in orderFamiliarity and stability, tax -neutral treatment, and commercial friendship and flexibility of the British Virgin Islands regulatory and judicial system.
The British Virgin Islands Government and the industry leaders on the island (from lawyers and accountants to bankruptcy practitioners and regulators) cooperate closely to realize that an industry that cooperates will better meet the needs of people who do business there, whileEnsure the ability to identify and reduce any relevant risks in jurisdiction.
This is obvious in the method adopted by the British Virgin Islands government to supervise virtual assets.The recently issued the “2022 Virtual Assets Service Provider Act” (“VASP Act”) aims to ensure that the British Virgin Islands continue to comply with international standards and abide by the specific suggestions of the following aspects of the special working group of the financial action. This is British VerjingThe Islands Financial Services Commission solicits the results of the public consultation process of feedback, opinions and comments on all stakeholders.
This chapter will discuss this key feature of the VASP bill in detail.However, from a high level, the VASP bill can be described as a balanced legislation, which is both commensurate and related.Companies engaged in custody and trading business are considered to be higher risk for end users, so they will be subject to higher levels of supervision. Other activities, such as projects and tokens based on innovative technology (this activity has always been registered by the British Virgin Islands registeredThe entity is performed), usually not the scope of supervision of the VASP bill.
According to the VASP bill, “virtual assets” are defined as a value representation form, which can be used for digital transactions or transfer, and can be used for payment or investment purposes.Special exclusion is the number of statutory currency, as well as credit number records of financial institutions that can be transferred to financial assets that can be transferred to the statutory currency, securities, or other digital transfer.
2. cryptocurrency supervision
The VASP Act took effect on February 1, 2023.Any entity hoping to provide virtual asset services or acting as a VASP from the British Virgin Islands or from the British Virgin Islands must be registered by the committee.The VASP that has been operated when the VASP Act takes effect must submit an application to the committee before July 31, 2023 (enable them to continue to provide virtual asset services during the application review).I contacted the committee before.
The application for registration as a VASP must be proposed by the form approved by the committee. The specifically explained the VASP registration category applied for, and attached a (A) business plan, which lists the nature and scale of virtual asset activities;Details of senior management personnel and compliance leaders include documents that prove that they meet the appropriate candidate standards of the committee;; (D) Applicable application fee.
When the committee approves the VASP application, it will register the applicant, issue a qualification certificate, and apply for the appropriate registration (including requiring professional compensation insurance).
The bill defines “VASP” as a virtual asset service in the form of an enterprise, and registered a virtual asset service provider for others or on behalf of others to perform the following or more operations or operations::
The exchange between virtual assets and legal currencies;
A exchange between one or more forms of virtual assets;
The transfer of virtual assets, the transfer involves a transaction on behalf of another person, transferring virtual assets from one virtual asset address or account to another virtual asset address or account;
Tools that store or manage virtual assets or can control virtual assets;
Participate in and provide financial services related to the issuer’s issuance or sales of virtual assets;
Implement other activities or operations specified in or regulations specified in the VASP Act.
People who engage in any activities or operations for others or representatives will be regarded as virtual asset services:
Hosting wallet or storage or controlling other people’s virtual assets, wallets or private keys;
Provide financial services related to the issuance, contract or sales of virtual assets;
Provide equipment such as automatic tellers, Bitcoin tellers, or automatic vending machines to promote virtual asset activities through electronic terminals, so that their owners or operators can actively promote the exchange of virtual assets and legal currencies or other virtual currencies;
Activities are engaged in providing virtual asset services, issuing virtual assets or participating in virtual asset activities in accordance with the “Guidelines”.
Whether the entity to carry out virtual asset services will depend on whether the relevant assets constitute a “virtual asset”.For example, derivative products based on cryptocurrencies need to be considered more carefully, and may be subject to the VASP bill or one of the “British Virgin Islands Securities and Investment Business Law” (“Siba”).
Similarly, a list of activities outside the range of Vasp bills should also be considered, that is, auxiliary infrastructure is provided to allow others to provide services, such as cloud data storage providers or complete service providers to verify the accuracy of signatures.
Although not intended to regulate cryptocurrencies, the BVI entities operating in the field of cryptocurrencies, blockchain technology, and web3 may also be restricted by the existing regulatory system of the BVI, including::
In 2004, the British Virgin Islands Commercial Company Law (revised version);
Siba;
2009 “Financing and Monetary Services Law” (“FMSA”);
2008 “Anti -Money Laundering Regulations” (revised version);
Anti -money laundering and terrorist financing codes;
The 2018 economic entity (company and limited partnership) bill (revised version) -If BVI company intends to hold any intellectual property rights related to basic technology, the bill is particularly important.
In order to avoid repeated supervision, Vasp clearly stipulates that people who register according to the bill and only provide a virtual asset service business do not need to obtain SIBA or FMSA permits.
3. Sales regulations
3.1 Vasp bill
According to the VASP bill, although it is not clearly excluded, it is generally believed that the single behavior of the issuance or sale of virtual assets in the British Virgin Islands is not a activity regulated by the VASP bill.However, if a entity representative of the British Virgin Islands provides financial services related to the issuance of virtual assets and the transfer of virtual assets, it may constitute a virtual asset service, and the entity is required to register in the committee according to the VASP bill.
3.2 Siba
SIBA supervises the provision of investment services in the British Virgin Islands.SIBA stipulates that anyone who is engaged in or in the territory from or claims to be engaged in any type of investment business must be carried out by the entity supervised and licensed by the committee.The definition of investment business is widely defined, covering: (i) investment transactions; (ii) arrangement of investment transactions; (iii) investment management; (IV) investment recommendations; (V) investment custody; (VI) investment operation; (VII) operating investment investmentExchange.
The definition of “investment” is also very wide, which may include: (i) shares, partnership enterprises rights or fund rights; (ii) bonds; (iii) documents that give shares, equity or bond rights; (IV) certificate of investment;(V) options; (vi) futures; (VII) difference contract; (VIII) long -term insurance contract.
Whether virtual assets belong to the SIBA system will depend on whether it has similar characteristics such as stocks in investment definition.
In addition, it is recommended to invest in the field of virtual assets or accept virtual assets through subscription and invest in more traditional asset categories. Whether such activities need to be registered as a fund for the fund to seek the British Virgin Islands.
4. Taxation
The British Virgin Islands International Taxation Bureau has not yet issued a formal statement on taxation on virtual assets.However, the British Virgin Islands is a tax neutral judicial area, and its income tax is set to 0%, which means that the British Virgin Islands government actually does not levy income tax.Therefore, the British Virgin Islands entities do not need to submit income tax declaration forms, but they must submit an annual economic entity declaration.In addition, the British Virgin Islands do not have capital gains tax, gift tax, benefit tax, inheritance tax or inheritance tax.
For tax purposes, according to the tests such as “management and control”, the British Virgin Islands entity may become a resident of any jurisdiction.All the British Virgin Islands entities are exempt from the British Virgin Islands, and can be proven from the British Virgin Islands registered agency or tax bureau.In addition, the British Virgin Islands implement a source -based tax system. According to this system, the British Virgin Islands entities will tax on the net income after deducting the net income of all British Virgin Islands.Therefore, if the British Virgin Islands entity operated outside the British Virgin Islands, if it is a tax resident of the British Virgin Islands, its foreign source income should not be taxed on the British Virgin Islands.
In the case of first token issuance, exchange operators need to recognize the influence of the “Overseas Account Tax Compliance Act” (“FATCA”) and “General Report Standards” (“CRS”).
5. Monetary transmission method and anti -money laundering requirements
The relevant currency transmission method of the British Virgin Islands is FMSA and is responsible for supervising the monetary service business.FMSA defines the monetary service business as:
Automatic teller machine service;
Remittance service;
Check redeeming service;
Currency exchange service;
The issuance, sales or redemption of the bill or travel check.
Although it is agreed that “money” and “currency” refers to the legal currency rather than cryptocurrencies, as mentioned above, the Vasp bill clearly excludes that business services that are registered according to the bill will not be subject to FMSA,It will be provided with special correlations and helps many virtual asset service providers (for example, involving a service provider involving virtual assets from one account to another account).However, if the company is deemed to be carried out any activities that do not belong to the scope of the Vasp bill, you need to be careful, because the exemptions are not suitable for these situations.
Also suitable for VASP, there are the “Anti -Money Laundering (Amendment) Regulations in 2022” and “Anti -Money Laundering and Territory Financing (Amendment) Business Code in 2022.” The Code will include VASP into British Verjing from December 1, 2022The AML/CTF system is suitable for transactions involving virtual assets worth $ 1,000 or more.
Although the specific requirements of the AML/CTF system in the British Virgin Islands are not belonged to the scope of this chapter, anyone who is constrained by the system usually needs to perform the following operations:
The appointment of the person as the person in charge of the anti -money laundering compliance is appointed to supervise it to obey the anti -money laundering law and contact the regulatory agency (according to the VASP bill, VASP must allow such officials to be approved by CIMA);
As a money laundering reporter, designated personnel will serve as a report line in the enterprise;
Implementation procedures to ensure the correct identification of trading opponents and risk -based monitoring (specifically consider any risks related to new technologies such as trading opponents, operating geographical areas, and new technologies such as virtual assets), proper record reservations, and appropriate training for employees for appropriate trainingEssence
In addition, the committee also issued the “Virtual Asset Service Provider to Prevent Money Laundering, Terror financing and diffusion financing Guidelines”, and formulated new regulatory requirements to ensure that the intermediary agencies get full information related to the transfer of virtual assets.
According to our experience, most parties are best to consult a professional third -party provider to assist in completing this process.
6. Promotion and test
The British Virgin Islands launched the “2020 Financial Services (Supervision Sand Box) Regulations” (“Sand Box Regulations”) to encourage fintech companies to carry out technological innovation under the loose regulatory system.The introduction of the sandbox regulations is for the following purpose:
It is hoped that startups that provide new financial services solutions, these solutions involve the current financial technology business model of the current British Virgin Islands (whether it is clear or implicit);
Hope to test innovative technology to provide startups that provide licensed financial services;
It has been permitted by the committee and hopes to test innovation technology as a part of its approved financial service products.
Before the VASP Act takes effect, people who approve the sandbox participants in accordance with the sandbox regulations can notify the committee in writing, expressing intention to provide the intention to provide innovative fintech -related innovative fintech -related technology (such notice is deemed to be registered as a virtual asset).
If the VASP, which is not registered in accordance with the VASP bill or is not approved in accordance with the sandbox regulations, hopes to carry out virtual asset services in accordance with the sandbox regulations and provide innovative financial technology, you can apply to the committee in accordance with the sandbox regulations, and pointed out that it plans to provide virtuality to provide virtuality to provide virtualThe business of asset services and apply innovative fintech.
7. ownership and license requirements
There is no restriction on the British Virgin Islands to hold cryptocurrencies for investment purposes.Although it is not tested at present, as the VASP bill is still in its infancy, this article is expected that investment managers may need to apply for registration based on the VASP bill to hold these virtual assets (if the investment manager is determined that the investment manager holds these virtual assets on behalf of third parties).Whether the investment manager obtained by the approval manager system also needs to be registered separately according to the VASP bill, it has not been determined.
Similarly, although it has not been tested, the investment fund registered or established in the British Virgin Islands, if it is intended to use virtual asset transactions as part of its investment strategy, it may not need to be registered according to the VASP Act.These virtual assets are being dealt with on a proprietary basis.
8. Mining
Cryptocurrency mining is not a scope of the VASP bill. Therefore, from the perspective of the British Virgin Islands, whether it is conducted in the British Virgin Islands or companies outside the British Verjing Islands, mining activities are still not regulated by supervisionActivity.The power cost of the British Virgin Islands is relatively high. Therefore, the mining industry (especially large -scale cryptocurrency mining) in the British Virgin Islands is unlikely to be efficient.
9. Border restrictions and statements
The British Virgin Islands do not give any general border restrictions on the ownership of virtual assets or imports.
As part of the British Virgin Islands’ commitment to cracking down on money laundering and terrorist financing, the 2010 Customs Management and Tariff Law stipulates that any more than 10,000 US dollars of items that enter or leave the British Virgin Islands should be carried in their luggage or carried with them.Declars, including coins, banknotes, travel checks and transferable notes.Although the VASP Act requires any financial services legislation or any other valuable clauses in regulations related to money laundering, terrorist financing and diffusion financing should be explained as including virtual assets, but in view of the nature of these assets, especially those based on those basedOr the assets recorded on the distributed ledger, there is a conceptual problem, that is, what will constitute the import or transportation of such assets.Therefore, we do not expect such requirements for virtual assets.
10. Report requirements
As mentioned above, as far as AML regulations are concerned, it will provide companies on the British Virgin Islands related to virtual asset services involving $ 1,000 or more than virtual assets involving virtual assets, which will be regarded as “related businesses” and need to follow the British.The legislative system of anti -money laundering/counter -terrorism financing/financial criminals of the Virgin Islands, including the suspicion of obeying the “travel rules” and reporting money laundering or other criminal activities to the committee and/or the British Virgin Islands’ financial investigation agency (if applicable).
OECD also released the final version of the encrypted asset report framework (“Carf”) and the 2023 update version of CRS, creating a cross -border report framework, creating conditions for providing standardized crypto asset transaction information exchange.Therefore, this article is expected to revise the CRS legislative framework to implement CARF suggestions.
11. Heritage planning and will inheritance
According to the British Virgin Islands law, cryptocurrencies and other virtual assets have not been widely used in inheritance of inheritance and will inheritance.
Any other specific system under the VASP Act or the British Virgin Islands did not specifically involve the treatment of virtual asset holders after death.This means that in principle, assuming that the British Virgin Islands’ legal jurisdiction over the inheritance of the deceased heritage, virtual assets will be treated in the same way as any other assets.Like many judicial jurisdictions other than the British Virgin Islands, there may be some uncertainty in the location of virtual assets.If the assets can be analyzed in accordance with the traditional legal conflict rules of the British Virgin Islands, before submitting an application to the British Virgin Islands Higher Court High Court, the virtual asset of the deceased cannot be effectively transferred to his/her heir or the beneficiaryEssenceIn order to handle the virtual assets of the deceased, it is necessary to designate a person as a legal representative as the deceased by obtaining appropriate authorization from the registration department.You can get two types of subsidies:
The will of the will (the dead leaves a will clearly involved the virtual assets of the British Virgin Islands);
The inheritance is awarded the management letter (the deceased did not leave a will clearly covering the virtual assets of the British Virgin Islands).
As far as the latter is concerned, the deceased will be regarded as the death of the virtual assets of the British Virgin Islands in the British Virgin Islands -even if they have an effective test of assets covering other judicial jurisdictions.The main potential difficulties that may occur are practical.In other words, any person who inherits virtual assets, on the surface, only the personal representatives of the deceased or the beneficiary (depending on the situation) have or can access and control the information required for the virtual asset (for example, storageOnly by the private key of the virtual asset) can access the virtual asset.Most exchanges have a policy of transferring virtual assets to close relatives, but these policies and transfer requirements varies from exchanges. Due to the risk of hacking and bankruptcy, the cautious approach is to avoid a large number of them in any time.Value remains on the exchange.
