Cryptolicense in the British Virgin Islands: Your Path to Offshore Opportunities

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DISCLAIMER: The term “cryptolicense” in this text should be understood as a virtual asset service provider (VASP) license. The use of the term “cryptolicense” is intended solely to simplify the text for the customers and visitors of the website.

The British Virgin Islands (BVI) has long been considered a leading offshore financial center. This Caribbean territory has a stable political atmosphere, a developed legal system and a range of financial services, which makes it particularly attractive.

In December 2022, the British Virgin Islands enacted the Virtual Assets (Service Providers) Act (VASP Act), which created a regulatory framework for cryptolicensees operating within the jurisdiction. This law introduces greater regulatory oversight and consumer protection for cryptocurrency companies operating in this jurisdiction and requires them to comply with certain anti-money laundering and counter-terrorist financing requirements, as well as other regulatory obligations such as record keeping and reporting. Thus, as of February 1, 2023, the Act became effective.

The body responsible for crypto regulation is the Financial Services Commission (FSC), which has the authority to issue licenses for activities related to virtual assets and supervise entities that engage in such business.

The growth of VASPs in the islands reflects the region's desire to embrace blockchain innovation and modern digital tools while adhering to strict regulatory rules. As the crypto industry evolves, the government will continue to make the necessary adjustments and improve its regulatory system to be at the peak of this industry, opening doors for financial development and growth.

The BVI's status as a leading offshore financial center, coupled with a favorable tax and regulatory environment, is fueling the growth of cryptocurrency businesses in the country

Key Numbers about Cryptolicense in the British Virgin Islands

minimum of 2

individual directors for VASP

0%

capital gains tax (CGT) rate

$10,000

application fee for VASP applicant seeking to operate virtual assets exchange

0%

withholding tax (WHT) rate

6 months

the period within which the application should be finalized from the date of initial submission to the FSC

0%

corporate income tax (CIT) rate

Legal Opinion about Cryptolicense in the British Virgin Islands

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Ganna Voievodina

Manimama

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CEO

"I recommend obtaining the British Virgin Islands cryptolicense as it meets regulatory requirements and ensures compliance with the law. By obtaining an FSC license, you demonstrate your commitment to operating within the law and complying with strict AML/CFT regulations. In addition, by complying with the licensing requirements, you can enhance your reputation, attract investment and gain a competitive advantage in the global cryptocurrency market. So don't waste any time and contact the Manimama team so that we can help you obtain the cryptolicense in this jurisdiction.”

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Types of Activities with a License in the BVI

Exchange between virtual assets and fiat currencies

having a cryptocurrency license, its holders offer conversion between virtual assets and fiat currencies, giving customers the ability to transact in multiple currencies.

Safekeeping or administration of virtual assets or instruments enabling control over virtual assets

cryptocurrency licensees can securely store and manage cryptocurrencies on behalf of individuals or entities, and provide services that enable individuals to retain control over their virtual assets.

Participation in, and provision of, financial services related to an issuer’s offer or sale of a virtual asset

licensees may engage in activities related to the provision of financial services for the issuance or sale of virtual assets by an issuer.

Exchange between one or more forms of virtual assets

those with a crypto license can convert or exchange one type of virtual asset for another.

Transfer of virtual assets

cryptocurrency licensees may secure a transaction on behalf of another person that moves a virtual asset from one virtual asset address or account to another.

Perform such other activity or operation as may be specified in the VASP Act or as may be prescribed by regulations made under section 47 of this act

the legislation does not provide an exhaustive list of activities under the license, so it can be extended by the relevant authorities.

Benefits of Obtaining a Cryptolicense in the BVI

Confidentiality:

  • The state maintains strong privacy protections for directors and shareholders of a business.
  • Unlike many other jurisdictions, the BVI does not provide for public disclosure of beneficial owners of companies, which can provide an additional layer of privacy and security.

Global reputation:

  • The jurisdiction is worldwide recognized as a trustworthy jurisdiction for the provision of financial services. This reputation can enhance the credibility of cryptocurrency businesses, making them more attractive to investors, partners and customers.
  • Obtaining a cryptolicense means meeting high standards of international compliance.

Tax efficiency:

  • The absence of capital gains tax is one of the main advantages of this offshore location, which can significantly increase the profitability of cryptocurrency operations by allowing companies to retain a larger portion of their profits.
  • There is no corporate tax in the BVI.

Strengthened security measures:

  • It has strict AML and KYC regulations in place. These measures help ensure the safety and integrity of financial transactions, protecting businesses from fraud and other illegal activities.
  • Ongoing regulatory supervision ensures that licensed entities adhere to best practices, providing an additional layer of security.
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Our Services

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Popular package

Premium

Full list of necessary services to set up of the VASP with connection to KYC providers, C2B account for the crypto transactions

  • Company formation in the British Virgin Islands
  • Individual AML/KYC policies
  • Applying for a cryptolicense with the FSC
  • Address of registration for 1 year
  • Full communication with the FSC
  • Search, integration, direct employment agreement with a qualified MLRO
  • Search, integration, direct employment agreement with a auditor
  • Opening C2B account for crypto activities
  • Setting up KYC/KYT Provider
  • Legal opinion for the VASP business
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Advanced

Set up of company ready to start cryptocurrency operational activity

  • Company formation in the British Virgin Islands
  • Individual AML/KYC policies
  • Applying for a cryptolicense with the FSC
  • Address of registration for 1 year
  • Full communication with the FSC
  • Search, integration, direct employment agreement with a qualified MLRO
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Basic

Creating the company and registration of VASP

  • Company formation in the British Virgin Islands
  • Standard AML/KYC policies
  • Applying for a cryptolicense with the FSC
  • Address of registration for 1 year
Order now

Our Experts in this Area

Ganna Voievodina

Ganna Voievodina

CEO, co-founder
LinkedIn anna.v@manimama.eu
Yevheniia Ukolova

Yevheniia Ukolova

BizDev-lawyer
LinkedIn y.ukolova@manimama.eu
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Step by Step Description

  1. Step 1. Initiating the process by obtaining relevant documents from the client

      At this step we require the following documents:

    • completed Instruction Sheet
    • notarized/certified copy of passport for each director, shareholder and beneficial owner
    • a notarized/certified proof of address for each director, shareholder and beneficial owner

  2. Step 2. Company incorporation

      Registration procedure consists of:

    • Selection of 3 company names and reservation the preferred name with the FSC, namely the BVI Registry
    • Appointment a registered agent for the company
    • Drafting and notarization of the memorandum
    • Submission of the relevant documents - client must prepare the articles of association and details of the registered agent and founder of the company; once completed and prepared, the client must submit them to the BVI Companies Registry for registration approval
    • Finding a suitable office and hiring employees

  3. Step 3. Applying for a cryptolicense

      The application must include the following information:

    • the names and addresses of the directors and senior officers of the VASP (and at least two of the directors must be individuals)
    • the names and addresses of shareholders and details of their shareholding
    • the physical address in the BVI
    • details of the auditor
    • details of the proposed authorized representative
    • a detailed business plan, which at a minimum should include the following:
      • information about the knowledge, expertise and experience of the person making the application
      • details of the nature, size, scope and complexity of the VASP, the underlying technology to be used, the method of service delivery and the virtual asset to be used
      • information on how the VASP will be marketed and the expected source of revenue
      • information on the expected staffing capacity at the start of operations and in the long term
      • any planned outsourcing arrangements and the systems that will be put in place to manage such outsourcing arrangements
      • an indication of start-up capital and financial projections for the first three years of operation, including projected establishment costs
    • a written risk assessment
    • a written compliance manual showing how the applicant, if granted registration, intends to comply with the requirements of the VASP Act and any other BVI regulations
    • the internal safeguards and data protection (including cyber security) systems intended to be utilized
    • the system to be put in place on how the VASP will handle client assets, custodian relationships and complaints
    • additional information deemed necessary by the FSC (depending on the applicant's type of activity)
      Applications fees as follows:

    • $10,000 (~ €9,185) - for entities that seek to provide virtual assets custody services
    • $10,000 (~ €9,185) - for entities applying to operate a virtual assets exchange
    • $5,000 (~ €4,592) - for any other type of virtual assets services

  4. Step 4. Obtaining a cryptolicense

      If the FSC approves an application for a cryptolicense, it will register the applicant and issue a Certificate of Registration to the applicant
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Understanding of Legislative Requirements in the BVI

A company wishing to operate a crypto business in or within the BVI can apply to the FSC for a crypto license

A company must apply for a cryptolicense to the FSC if it wishes to conduct in or within the Virgin Islands a service business in one or more of the following categories:

  • to carry on the business of providing a virtual assets service - the business of engaging on behalf of another person in any activity or operation which outlined in Section 2 of the VASP Act
  • to engage in the business of providing a virtual assets custody service - the acceptance for safekeeping of virtual assets or instruments that enable a virtual asset service providers to exercise control over the virtual assets or instruments
  • to operate a virtual assets exchange - operation of a trading platform that is managed for the purpose of allowing an offer or invitation to be made to buy or sell any virtual asset in exchange for money or any virtual asset and which comes into custody, control, power or possession of, or over, any money or any virtual asset at any point in time during its course of business

    • Additionally, the legislation defines a list of activities that do not categorize persons as VASPs:

    • providing ancillary infrastructure to allow another person to offer a service, such as cloud data storage provider or integrity service provider responsible for verifying the accuracy of signatures
    • providing service as a software developer or provider of unhosted wallets whose function is only to develop or sell software or hardware solely creating or selling a software application or virtual asset platform
    • providing ancillary services or products to a virtual asset network, including the provision of services like hardware wallet manufacturer or provider of unhosted wallets, to the extent that
    • such services do not extend to engaging in or actively facilitating as a business any of those services for or on behalf of another person solely engaging in the operation of a virtual asset network without engaging or facilitating any of the activities or operations of a VASP on behalf of customers
    • providing closed-loop items that are non-transferable, non exchangeable, and which cannot be used for payment or investment purposes accepting virtual assets as payment for goods and services

    Requirements for Obtaining a BVI Cryptolicense

    A cryptolicense in the BVI requires an auditor and MLRO

    The legislator stipulates a number of requirements that must be met by those who want to obtain the cryptolicense. Basically, they are as follows:

    • at least 2 individual directors, one of whom is physically residing in the British Virgin Islands (if required by the FSC, depending on the nature and risk associated with the VASP; a director is deemed to be physically residing in the Virgin Islands if the director's cumulative period of absence (if any) from the Virgin Islands during the year does not exceed 120 days)
    • appointment of an authorized representative, an auditor, a compliance officer, a qualified individual as its Money Laundering Reporting Officer (MLRO)
    • prior written approval of the FSC is required for the appointment of a director or senior officer
    • cryptolicensees are required to maintenance customer identification procedures, keeping records of KYC processes and suspicious transactions, setting up internal procedures for reporting suspicious transactions etc.
    • holders of cryptolicense are under the BVI’s AML/CTF regime for transactions involving virtual assets valued at $1,000 (~ €918) or more
    • ongoing obligations include filing annual returns, filing annual financial statements and filing annual compliance officer reports
    • providing the FSC with information about the next:
    • the level of compliance with the requirements of the VASP Act
    • the level of exposure of clients
    • a summary of its clients by geographical location
    • the financial position
    • the risks encountered and how they have been resolved or are being resolved, including whether there has been any financial or other loss
    • the key performance indicators, achievements and any relevant statistical information
    • any significant complaints by clients and how such complaints have been resolved
    • where a significant complaint by a client has not been resolved, the plan put in place to resolve the client’s complaint

      • There are also additional requirements for activities such as virtual assets custody service and virtual assets exchange.

    Taxes in the BVI

    Activities related to cryptocurrencies are not taxed

    The BVI is a tax neutral jurisdiction. There are NO:

  • specific taxes levied on virtual assets
  • withholding tax
  • capital gains tax
  • income tax
  • corporate taxes

    • This makes the islands an attractive destination for businesses that wish to start a business in this jurisdiction.

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    Frequently Asked Questions

    • Is cryptocurrency subject to regulation in the British Virgin Islands?
      The VASP Act came into force on February 1, 2023. This law regulates virtual asset service providers and requires them to get registered with the Financial Services Commission (FSC).
    • What are the advantages of obtaining a cryptolicense in the British Virgin Islands?
      This particular jurisdiction offers a favorable regulatory environment, which makes them an appealing choice for businesses looking to obtain the cryptolicense. The country is tax neutral, which adds to its popularity, meanwhile its strong reputation in the financial services industry inspires confidence among investors.
    • Are there any compulsory requirements for directors of a company that is going to receive a cryptolicense in this jurisdiction?
      Yes, the law states that there must be at least 2 individual directors, one of whom must be resident in the Virgin Islands (he/she is deemed to be physically residing in the Virgin Islands if the cumulative period of absence (if any) from the Virgin Islands during the year does not exceed 120 days).
    • How much do I have to pay to apply for a cryptolicense to operate a virtual asset exchange?
      The law provides for an amount of $10,000.
    • Do I have to pay cryptocurrency tax in the British Virgin Islands?
      There is no special taxation of cryptocurrencies here.
    • Are British Virgin Islands cryptolicense holders obliged to comply with AML/CFT requirements?
      Yes, AML/CFT obligations mainly include requirements for strong due diligence of customers and enhanced customer due diligence procedures, adequate record keeping measures, mechanisms for complying with mandatory reporting, monitoring and assessing the risks arising from the use and exchange of virtual assets, as well as the activities of providers themselves.
    • Is it mandatory to have an auditor to get a cryptolicense in this jurisdiction?
      Yes, under Article 14 of the VASP Law, it is required to appoint and have an auditor at all times to review the financial statements of the cryptolicense holder.
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