The British Virgin Islands (BVI) is positioning itself as a major hub for digital asset activities, aiming to capitalize on the expanding market. Lorna Smith, Minister for Financial Services, Labour, and Trade, underscored the territory’s potential to be a significant player in the global digital asset market.
Smith emphasized the importance of implementing robust rules and systems to manage the sector effectively, highlighting the need to balance innovation with compliance with legal standards. Collaboration with other countries is deemed essential to address regulatory challenges and combat financial crime in the digital asset space.
The BVI took a significant step towards regulating the digital asset industry with the introduction of the Virtual Assets Service Providers Act in 2022, which became effective in February 2023. This legislation outlines registration requirements, criteria, and responsibilities for virtual asset activities, empowering the BVI Financial Services Commission to oversee service providers and impose penalties for violations.
Smith pointed to the Act as evidence of the BVI’s commitment to fostering a secure and supportive environment for digital asset enterprises. She also noted global developments in digital asset regulation, such as standards set by the Financial Action Task Force (FATF), the OECD’s framework for crypto asset tax reporting, and Europe’s Markets in Crypto Assets Regulation (MiCA).
With over 60 license applications already received under the Virtual Assets Service Providers Act, the BVI is attracting tech and crypto entrepreneurs. Smith expressed confidence in the territory’s potential to emerge as a leading global center for digital assets, citing its expertise in financial and professional services and a comprehensive legal framework.
However, alongside growth opportunities, the BVI faces challenges, including its reputation as a hotspot for crypto-related scams. Notably, the now-defunct crypto hedge fund, Three Arrows Capital, was formerly based in the BVI.
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