British Virgin Islands Companies for Blockchain and Cryptocurrency
The British Virgin Islands (BVI) have become the jurisdiction of choice for many blockchain and crypto businesses seeking to establish corporate structures to carry out a range of activities from token offerings to crypto exchanges through to DeFi, dApps, NFT sales and marketplaces.
Many of the world’s leading cryptocurrency businesses, including BitFinex, Kraken and FTX have used BVI companies within their corporate structures due to the range of benefits the jurisdiction affords.
Why the British Virgin Islands for blockchain and crypto?
The BVI is an attractive jurisdiction for blockchain and crypto businesses for a number of reasons:
Ease of incorporation – BVI companies can be established in a couple of days following satisfaction of customer due diligence.
0% taxation – there is no corporation tax, capital gains tax or withholding tax for BVI companies (see more information from EY).
Accounting requirements – whilst a company must maintain records of financial transactions, there is no requirement to prepare or file financial statements.
This is particularly helpful for blockchain and crypto businesses who may struggle to prepare traditional financial statements in accounting software but can instead easily refer to on-chain transactional activity.
BVI Crypto Regulation – at present, there are no specific laws or regulations for cryptocurrency or blockchain activity.
British Virgin Islands Blockchain & Crypto Regulation
A large part of the success of the BVI for crypto and blockchain companies is due to the fact that the jurisdiction doesn’t have any specific crypto laws or regulations in relation to cryptocurrency or blockchain.
This has meant the decision on whether or not a particular activity is licensed or regulated is determined by an analysis of the proposed activities against the existing BVI Banking & Financial Services laws and regulations.
This has allowed innovative blockchain and crypto projects to get to market, issue tokens, and operate their Web 3 business models without the friction and cost of a licensing process, a decision often taken whilst awaiting further clarity in other jurisdictions.
Whilst in each instance it is prudent to obtain legal advice from BVI lawyers (which Cavenwell can arrange from our partnered BVI law firms), the BVI route is a tried and tested path for a lot of crypto activity, including token issuances, NFT issuances, centralized and decentralized exchanges (DEXs), NFT marketplaces and much much more.
How are BVI companies used by crypto and blockchain projects?
A BVI company is commonly used as a token issuance vehicle, to be responsible for the issuance of a project’s token, and for entering into SAFTs with venture capital funds. A further BVI company may also be established to be the operator of smart contracts, such as in the case of an NFT marketplace or a Decentralized Exchange (DEX).
In some instances, particularly where there is a desire for a project to be governed by a Decentralized Autonomous Organization (DAO), a BVI token issuance company is combined with a Foundation, such as a Cayman Islands Foundation Company or a Panama Private Interest Foundation, which can be used to manage the projects treasury and be responsible for the governance of the token.
How we can help
Cavenwell provides a bespoke suite of end-to-end managed services for Web 3 projects including assessing whether the British Virgin Islands are a suitable jurisdiction for your proposed activities, arranging incorporations and legal advice from BVI lawyers and opening cryptocurrency exchange, fiat banking and payments accounts.
We can also assist with establishing multi-jurisdictional corporate structures, in other key crypto jurisdictions like the Cayman Islands and Panama.
The content of this insight is of an educational nature and is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.