As crypto and blockchain continue to take the world by storm, a number of offshore financial centres have sought to position themselves as jurisdictions of choice for those looking to operate within the sector. The British Virgin Islands is no exception.
According to a report last year from CoinShare, BVI is the second largest cryptocurrency market in the world, after the USA which pips it to number one position. As well as being a well established and highly respected centre for financial services, its existing frameworks adapt perfectly to new businesses wanting to open within this dynamic sector.
So apart from the fact it is located in the heart of the Caribbean and is widely considered as paradise, what else makes BVI your perfect place for a crypto or blockchain business?
There are a lot of very good reasons as to why you should choose BVI as a location for any business. These include the fact that it is very politically stable, a member of the International Organisation of Securities Commissions, and the British Virgin Islands Financial Services Commission is there to ensure total adherence with all domestic and foreign regulatory standards.
Of course, lots of businesses are attracted to this jurisdiction due to its simple yet effective regulatory framework, tax benefits, up-to-date legislation and reliable control policies. The legal system is based on the British legal system and English common law, and as a British overseas territory, it enjoys much of the same rights as the UK. In other words, its reputation as a leading international financial hub is well deserved.
Why Crypto in BVI?
As mentioned earlier, BVI is the world’s second largest crypto jurisdiction and in 2017, it announced a trading volume of over $78.5 billion over just six months- just $5 billion behind the US.
In terms of regulations for businesses operating in the crypto sector, there are not many in place at present. Choosing to opt for the wait-and-see approach, the government seem unlikely to introduce any laws that could possibly impact the growth of the flourishing industry.
This means that it is a great place for fledgling businesses to set up to “test the water” before considering regulation and expansion in other jurisdictions in the future.
Taxation and Corporate Rules
If your business is based in BVI but carries out all of its activities, outside of the country, you are not subject to any income tax. This is great for startups that are looking for a good base to conduct international activities. BVI also has a number of double taxation treaties with various countries around the world.
Registering a BVI company is quick and low-cost, and Fast Offshore provides fast service during the entire process.
Crypto and the Government
The authorities in BVI have demonstrated their recognition of Bitcoin and Ethereum focused funds and this has resulted in a number of big Fintech companies including Bitfinex, Finamatrix, and Football Coin, being incorporated there. The jurisdiction has also been popular for ICOs and has maintained this popularity, despite the recent downturn in their user.
At the time of writing, the government has not issued any regulatory guidance for ICOs, ITOs, cryptocurrencies, blockchain, or any other kind of financial technology. It has however indicated that it will in the future, whilst remaining highly supportive. If however, the kind of token that is issued is classed as a security, it would fall under existing securities regulations and those issuing them should be sure to adhere with the law.
At present, cryptocurrencies are not treated as legal tender, or money in BVI and regulations that apply to fiat currency do not apply in these cases. Furthermore, there are no government backed crypto coins and whilst the official currency is the US Dollar, there is no central bank within the country.
The government has even entered a partnership with blockchain company LifeLabs to strengthen their emergency planning through the use of a Crypto Wallet. The company, LifeLabs, makes a wallet and has a token called LIFE on the Ethereum blockchain. The wallet supports Ethereum, Bitcoin, and the firm’s own crypto tokens. The idea behind the partnership is that when disaster happens, and traditional means are disrupted, British Virgin Islanders will be able to use LIFEWallet to receive government assistance. The government will also utilize blockchain technology in such an event.
To find out more about why crypto and BVI are a perfect fit, as well as to understand how Fast Offshore can assist you with you corporate, financial, and legal needs, get in touch here.