The Financial Services Commission (“the Commission”) introduced the Virtual Assets Service Providers Act, 2022 (“the VASP Act”), which comes into effect on 1st February 2023.
The VASP Act creates the legal framework for the registration and supervision of Virtual Assets Service Providers (VASPs) operating in and from within the Virgin Islands. Through the provisions of the VASP Act, the Commission is established as the competent authority for the supervision of persons engaging in any virtual assets service.
The VASP Act describes the activities that require registration through the definitions of key terms such as virtual assets, virtual assets service and VASPs. For clarity, activities that do not qualify as virtual assets services have also been outlined in the VASP Act.
Key features of the VASP Act include:
- details of the application and approval requirements for registration as a VASP, including additional specific requirements for VASPs seeking to provide virtual assets custody services or operate a virtual assets exchange;
- the requirement for VASPs to appoint authorised representatives;
- particulars of the functions of an authorised representative and the requirement for authorised representatives to be approved by the Commission to act in relation to VASPs;
- the requirement for VASPs to appoint an auditor approved by the Commission and the obligations of the auditor to the Commission;
- details of the information that a registered VASP must report to the Commission on an ongoing basis;
- the process to be adopted for disposing or acquiring a significant or controlling interest in a VASP;
- the establishment of measures to protect clients’ assets;
- prohibitions on making or issuing misleading advertisements;
- AML/CFT and other regulatory compliance matters; and
- the legal mechanism for a VASP to participate in the Regulatory Sandbox.
The VASP Act also incorporates special consideration for persons conducting virtual assets service before 1st February 2023. In order for any such person to continue providing a virtual asset service, a completed application must be submitted to the Commission for registration as a VASP by 31st July 2023. Where an application is not submitted by the said date, the person will be considered to be performing unauthorised business and subject to enforcement action accordingly.
For information on completing and applying for registration as a VASP, including the application form, the Commission provided the Guidance on the Application for Registration of a Virtual Assets Service Provider.
The Virtual Asset Service Providers Guide to the Prevention of Money Laundering, Terrorist Financing and Proliferation Financing is also available on the Commission’s website to provide VASPs with additional information to aid in compliance with AML/CFT obligations.