Crypto convos continue in the BVI

As the territory’s financial services sector positions to fully tap into virtual assets business, local experts recently held a forum where they discussed the tight measures the BVI would have to put in place to ensure that the jurisdiction does not damage its reputation while pursuing cryptocurrency business.

At the forum — titled “Embracing the Crypto Revolution: Positioning the BVI as a Global Hub for Virtual Assets” — experts delved into the intricacies of the BVI’s regulatory framework for virtual asset service providers (VASPs), discussing application processes, emerging trends, and the balancing act between fostering innovation and maintaining robust regulation.

One expert — Kishelle Blaize-Cameronm, a director at the BVI Financial Services Commission — warned of the challenges in regulating high-risk virtual asset businesses and emphasized the need for a risk-based approach and robust communication with stakeholders.

Blaize-Cameron explained the cryptocurrency space is volatile, noting, “it changes so often that things that would have been relevant two years ago are no longer relevant today. That’s a challenge, and that requires us to be a little bit more agile. Our supervisory regime requires us to have systems available to adapt to changes because they’re coming quickly and fast.”

While Blaize-Cameron warned of the challenges in the sector, Ayana Hull, Head of Private Wealth and Regulatory at Harneys, highlighted that the BVI would have to ensure that it is abiding by all international regulations if it ventures further into the crypto space.

“The industry, as gatekeepers, have to comply with the FATF standards and the legislation, to mitigate risks, and to maintain the BVI’s reputation… We have an obligation to make sure that we uphold the compliance function of the industry”, Hull highlighted.

Both Blaize-Cameron and Hull addressed the complexities and nuances in processing businesses in the crypto space, saying that quality assessments would be needed without unduly stifling business growth.

Blaize-Cameron said, “It’s complex. It’s new. It’s cross-border. We must undertake quality assessments to ensure that we have a viable and quality business in the jurisdiction going forward.”

She added, “There are some characteristics that are attached to virtual assets that elevate the inherent risks attached to the possibility of nefarious activities, like money laundering, terrorist financing, and proliferation financing. Our expectation is that entities that are using the products can identify the risks and present to us proper risk management structures that mitigate those risks to the client, the company, and to the jurisdiction.”

She said as part of due diligence, persons seeking authorization or licensing from the BVI FSC would have to demonstrate that there is financial viability within the thing that they’re seeking to be authorized.

“Then specifically to VASP, we expect to see sufficient capital — amounts that are commensurate with the nature, size and complexity of the application. Given the specific inherent risks, we expect to see professional indemnity insurance that captures certain types of risks, for example, loss of customer assets or issues in relation to data breaches, etcetera,” said Blaize-Cameron

Looking forward, Blaize-Cameron and Hull expressed optimism about the BVI’s positioning as a leading jurisdiction for virtual assets, balancing regulatory diligence with industry growth and innovation.

Virtual assets have been a growing sector in recent years as more people are drawn to currencies that aren’t controlled by governments and central banks. Still, there have been a lot of scams related to virtual currencies and a lot of questions related to the safety of the technology that they use.