The British Virgin Islands (BVI) Playbook for Virtual Asset Service Providers (VASPs)

How the BVI Financial Services Commission regulates crypto – and how CRYPTOVERSE Legal gets you licensed, fast and clean.

Executive Summary

The British Virgin Islands (BVI) regulates Virtual Asset Service Providers (VASPs) through a dedicated statute, the Virtual Assets Service Providers Act, 2022 (the “VASP Act”), with day-to-day supervision by the BVI Financial Services Commission (FSC). If you exchange, transfer, safeguard, or provide financial services around issuances of virtual assets in or from the BVI, you are likely in scope and must register – and in some cases satisfy additional approval conditions – before going live. The regime is principles-based: it hinges on fitness and propriety, sound governance, AML/CFT/CPF compliance (including the Travel Rule), and technology-risk controls. Application fees are tiered by activity and the FSC sets clear expectations on the contents of your application pack and typical processing timelines.

Who is in Scope? (Regulatory Perimeter)

1. What is a “VASP”? A VASP is a business that provides one or more of the following, for or on behalf of another person: (a) exchange between virtual assets and fiat; (b) exchange between one or more forms of virtual assets; (c) transfer of virtual assets; (d) safekeeping or administration of virtual assets or instruments enabling control; and (e) participation in, and provision of, financial services related to an issuer’s offer or sale of a virtual asset.
2. What is not a VASP? The Act excludes back-end infrastructure providers, pure software developers, unhosted-wallet makers, those solely operating a VA network without client-facing VASP functions, providers of closed-loop items, and merchants simply accepting VA as payment.
3. Where does the regime apply? The Act applies to entities operating in or from within the Virgin Islands; AML laws (AMLR/AMLTFCOP), the Proceeds of Criminal Conduct Act, the Counter-Terrorism Act and Proliferation Financing legislation apply to VASPs as they do to other regulated entities.
4. Definition of “virtual asset”. The Act adopts a functional definition (digital representation of value that is digitally traded or transferred and used for payment or investment), excluding fiat-currency representations and certain other items.

Regulated Activities (What You Can Do – Once Registered)

The FSC groups registration along three service lines: (i) operators of virtual asset exchanges, (ii) providers of virtual asset custody services, and (iii) other virtual asset services. Each line triggers specific disclosures and conditions in your application and ongoing obligations.

1. Exchange operation – running a trading platform that facilitates offers to buy/sell VAs and takes custody, control, power or possession of money or VAs at any point. Approval conditions are set out in Part IV.
   
2. Custody (safekeeping/administration) – acceptance for safekeeping of VAs or instruments enabling control. Part IV includes additional information and conditions for registration.
   
3. Other VA services – wallet hosting/private-key control, financial services relating to issuance, VA kiosks/BTMs, etc., to the extent they amount to “virtual assets service”.

Corporate Governance & Organisational Requirements

The VASP Act expects financial soundness at all times: maintain assets and conduct business so you can meet liabilities as they fall due; notify the FSC promptly if you fall short.

1. Directors & Senior Officers. Every VASP must have at least two individual directors; the FSC may require a BVI-resident director depending on nature/risk. Director/senior-officer appointments require prior FSC approval and must meet “fit and proper” criteria.
2. Authorised Representative (AR). Unless you maintain “significant management presence” in the BVI, you must appoint an FSC-approved AR to act as your interface with the FSC, accept service, and maintain required records locally.
3. Auditor. VASPs must appoint an auditor (with limited exemption possibilities) and provide access needed to audit the financial statements.
4. Compliance Officer. The Act provides for appointment of a Compliance Officer; Part VI lists ongoing supervisory and enforcement architecture (register, cancellation, revocation, enforcement powers).
5. Record-keeping & client assets. The Act expressly addresses maintenance of records and client assets in Part III; these sit alongside AML/CTF record-keeping under the AMLR and AMLTFCOP.

AML/CFT/CPF: Travel Rule, Sanctions & Reporting

The FSC has published dedicated Travel Rule Guidance (read together with the AMLTFCOP/AMLR and the VASP AML Guide). Directors and senior officers must ensure the governance framework operationalises Travel Rule compliance.

Core points to embed:

• Required data fields must accompany inter-VASP transfers so that originator and beneficiary are readily identifiable (e.g., names, registered/trading names for legal persons, account/unique identifiers, date/place of birth or national ID).
  
• USD 1,000 threshold: Transfers at or above this amount must meet full Travel Rule data obligations; sub-threshold transfers require risk-based scrutiny and detection of structuring/linked transactions.
  
• Jurisdictions without Travel Rule: Take reasonable steps to assess the recipient VASP’s ability to receive required data; retain information and consider risk factors before releasing funds to the beneficiary.
  
• Policies & controls: You must be able to demonstrate the steps and systems implemented to achieve compliance; third-party Travel Rule providers are permitted subject to prior and ongoing risk assessment and full disclosure to the FSC.

Sanctions screening & STRs. The VASP AML Guide expects 24-hour screening capability, prompt freezing/reporting of designated persons, and robust internal SAR processes overseen by a qualified MLRO.

Marketing & Communications

1. The Act defines “advertisement” and contains a specific prohibition on misleading advertisements and statements. In short: communications that promote subscriptions/purchases of VAs must be fair, clear and not misleading. (Definition of “advertisement”; Part III includes “Misleading advertisement, statement, etc.”).
2. What this means in practice: maintain an approvals log for public-facing materials; align risk disclosures to product complexity; and ensure consistency between whitepapers, platform UX copy, and regulatory submissions.

How to Get Registered: Pathway, Pack & Timelines

1. Application channels & completeness. Applications must be submitted on the FSC’s PDF form with all supporting documentation (governance, risk, compliance and operational frameworks) and the requisite fee; the FSC will not process incomplete filings. Submissions are typically made via an Authorised Representative or local service provider.

Fees by activity (application stage):

• Custody service: USD $10,000
• Exchange: USD $10,000
• Other VASP services (non-custody, non-exchange): USD $5,000
  (Fees are payable per category if applying for multiple.)

What the FSC expects to see in your pack (illustrative, not exhaustive):

• Corporate Governance Framework; Risk Management and Compliance Programmes.
• Outsourcing agreements with third-party due diligence and monitoring, where applicable.
• Cybersecurity framework; technology stack description (Statement of Technological Infrastructures).
• Business Continuity Plan compliant with the Regulatory Code.
• Declarations by the AR and the applicant; note that false or misleading information is an offence and leads to denial and potential enforcement.

2. Possible conditions of registration. The FSC may require professional indemnity insurance (or equivalent surety) and, in some cases, a regulatory deposit.
3. Processing timelines. The FSC endeavours to issue initial comments within ~6 weeks and aims to conclude within six months (quality-dependent).
4. Special approvals for exchanges/custodians. Part IV sets additional information, conditions, restrictions for both custody services (ss.27–29) and exchanges (ss.30–32). Build your controls, segregation model and market-integrity tooling with these sections in mind.

Ongoing Obligations (Life After Registration)

Expect continuous oversight: changes in ownership/control and appointments of directors/senior officers generally require prior FSC approval; annual returns, financial statements and the maintenance of “fit and proper” standards are part of the baseline.

Operate financially soundly; keep robust records; keep your authorised representative and auditor in good standing; and keep your AML/CFT/CPF programme – particularly Travel Rule tooling – tested and documented.

How CRYPTOVERSE Legal Helps You Win in the BVI

1. Strategy & scoping. We stress-test your business model against the VASP Act perimeter and structure the optimal licensing footprint (single category vs. multi-category, exchange vs. custody vs. other services).
2. Application build. We craft the end-to-end dossier – governance map, risk and compliance frameworks, Travel Rule implementation memo, cyber and data-governance exhibits, outsourcing files, BCP, and declarations – fully aligned with FSC guidance and Part IV requirements where relevant.
3. Local interface. We coordinate seamlessly with your Authorised Representative, ensuring precise FSC communications and timely responses to clarification requests within stated windows.
4. Operationalisation. From Travel Rule vendor selection to sanctions-screening runbooks and SAR workflows under the VASP AML Guide, we turn policies into working controls, ready for supervisory review.
5. Timeline management. We structure the project plan around the FSC’s review cadence (initial comments in ~6 weeks; overall conclusion targeted within six months), reducing iteration cycles by submitting a genuinely “complete application” on Day 1.

Key Takeaways

• If you provide exchange, transfer, custody, or issuance-related services for VAs in or from the BVI, you are in scope.
• Applications are category-based with clear fees and exacting documentary expectations.
• Governance, AML (including Travel Rule), technology risk and BCP are the centre of gravity.
• The FSC may condition registration on PI insurance and even a regulatory deposit.
• Marketing must not mislead; treat all investor-facing content as regulated communications.

Next Steps

Thinking about BVI? We’ll pressure-test your model against the Act, map the right licensing perimeter, assemble an FSC-ready pack, and operationalise controls that pass muster the first time. Contact CRYPTOVERSE Legal to schedule a scoping workshop and get your BVI VASP registration roadmap.

Legal Notice

This article is provided for general information only and does not constitute legal advice. Regulatory positions may evolve; always seek formal advice tailored to your facts. (See, e.g., VASP Act 2022; FSC Guidance on VASP Applications; VASP AML Guide; Travel Rule Guidance.)

Frequently Asked Questions