The British Virgin Islands’ fintech revolution
By Phillip Graham, Partner, Harneys – The BVI is reportedly the second biggest cryptocurrency market in the world, according to statistics published by CoinShares, which used data collected from the 15 biggest cryptocurrency exchanges and concluded that the BVI had a trading volume in crypto assets valued at USD78.5 billion, in the first six months of 2018. This puts it just USD5.3 billion behind the USA. We also noted in a recent PwC report that two of the three largest Initial Coin Offerings (ICOs) have also been domiciled in the BVI.
These startling statistics come as no surprise to those of us at Harneys who have been at the coal-face of the crypto buzz for a number of years now and have seen quite incredible activity in this area, which includes not only ICOs and cryptocurrency exchanges, but also a high volume of investment fund launches which are solely focused on this unique asset class.
The opportunity for the jurisdiction to be one of the pioneers in this space has not been lost by both the public and private sector alike and with a combination of joint initiatives and forums, the laws and regulations in the BVI are adapting to ensure that this area is lightly but appropriately regulated to meet the overwhelming demand of the global client base.
We have already seen in June of this year, the launch of the micro business company or MBC. Aimed at small, non-financial sector businesses anywhere in the world, MBCs will be simpler to set up and operate, with lower registration and annual fees. One of the key aspects is that MBCs will be able to be formed and accessed through a smartphone, with AML checks being done via an app connecting to the Regulator’s IT platform.
On top of that, we have also seen an amended AML Code of Practice this summer, which allow operators carrying out BVI AML checks to use the latest electronic innovations to improve and speed up KYC processes, including the approval of a digital verification system.
We have already had the new Limited Partnership Act, 2017, which came into force at the start of the year and provided a ground-breaking new limited partnership structure, drawing on best practice for these structures from around the world and we will very shortly have a huge expansion on the use of segregated portfolio companies, to provide an unregulated and flexible solution to meet the requirements of clients who are seeing innovative new ways to operate SPCs.
Harneys has worked tirelessly on all of these initiatives and we are delighted that the jurisdiction has been able to move so positively despite the challenges that Hurricane Irma brought on last year. It is a true testament to both the resilience and forward thinking nature of these islands.
With hotly anticipated legislation expected in the ICO and digital asset exchange areas, as well as potentially the introduction of a Regulatory Sandbox in the BVI, we anticipate that the BVI’s fintech movement will only continue to go from strength to strength. n