BVI: Determining Whether Managed Services Are Operated Locally or From the Territory
The British Virgin Islands Financial Services Commission (FSC) VASP application guidance requires operators providing virtual asset services in or from within the BVI to apply for registration. Custody and virtual asset exchanges must also satisfy the corresponding additional requirements. Accordingly, the statement that an "offshore company has no local clients" cannot substitute for a business analysis. It should be explained which legal entity contracts, who holds the assets, from where business decisions are made, and who controls the wallets and trading systems, rather than merely asking whether a registered agent can incorporate a company.
Cayman: Distinguishing General VASP Registration From the Two Categories of Business Licence
The Cayman Islands Monetary Authority (CIMA) states that, with effect from 1 April 2025, virtual asset custody and trading platforms are subject to a licensing regime; other regulated virtual asset services generally follow the registration route, and arrangements lawfully granted an exemption are treated separately. Where a company simultaneously engages in activities requiring registration and activities requiring a licence, the overall route should be determined in accordance with CIMA rules, and "registered VASP" must not be understood to mean that any custody or trading business may be carried on. When purchasing a shelf company, particular attention should be paid to the actual approvals, not merely the licence name used by the seller.
Legacy Institutions in the Transitional Period Must Not Be Conflated With New Applicants
CIMA established a 90-day licence application window for institutions that were already registered and operating custody or trading platforms at the relevant time, and permits institutions that meet the arrangements to continue the relevant business during the licence review. Accordingly, the original draft's statement that "business cannot be carried on on the basis of ordinary registration alone" has cautionary value for new entrants, but it cannot be relied on to conclude that all legacy institutions awaiting approval have no authority to operate. Due diligence should obtain the original registration, the application filed on time and the records of subsequent decisions, and then confirm their current status; newly established projects cannot borrow the transitional experience of others.
The Value of an Offshore Structure Must Be Verified Against Genuine Business Needs
A structure in which the group establishes a holding company in the BVI and a licensed subsidiary in another location directly serves clients is different from one in which the BVI company itself contracts and quotes, controls receipt of funds and assumes redemption commitments to clients. Outsourcing custody does not automatically turn the latter into a pure holding company. Even where the local VASP route has been implemented, the target client market, fiat payment and banking access must still be verified separately. When selecting a location, operations, regulation and responsibility for client assets should be placed on the same structure chart, so as to avoid creating an entity that cannot open an account or explain its responsibilities merely for ease of incorporation.
Recommended Actions
- Map the contracting, client acquisition, asset control, exchange and settlement relationships by legal entity, and determine the actual connection of "operating in or from the territory".
- Verify registration, licensing and scope of activities through official FSC or CIMA channels, and require counterparties to provide complete approvals and conditions.
- For existing Cayman institutions relying on transitional treatment, verify that applications were filed on time and the status of pending approval; do not accept oral statements that a licence "is being changed".
- Treat client market access, fiat payment arrangements and bank account opening as separate feasibility conditions, and do not promote offshore global access.
Information note: This article provides general information and does not replace legal advice based on specific facts.
References
- Guidance on Application for Registration as a Virtual Assets Service Provider — BVI Financial Services Commission
- Amendments to the Virtual Asset (Service Providers) Act in Effect 1 April 2025 — Cayman Islands Monetary Authority
- MiCA Article 61—Provision at the exclusive initiative of the client — ESMA / European Union
