BVI’s innovative products and legislation stimulated much discussion during a recent Opalesque Roundtable Series on Innovation titled: “The Great Disruption: Innovation, Digitization & Multiplicity of Value Systems”.
The virtual event, sponsored by BVI Finance, saw the participation of seven senior financial professionals including Simon Gray, Head of Business Development and Marketing – BVI Finance; Lodewijk Van Setten, Senior Counsel - Walkers; Hannah Terhune, Chief Legal Officer – Capital Management Law Group; Lisa Lou, President – Bank of Asia (BVI); Rebecca Jack, Senior Associate – Appleby; Denis de Montigny, PhD, CFA, CPA, Founder and CEO – FinSpark; and Rik Willard, Founder & Managing Director – Agentic. The discussion was moderated by Matthias Knab, Founder of Opalesque.
While Lisa Lou asserted that BVI is already attracting some funds that include digital asset portfolios, Rebecca Jack indicated that the Sandbox regime is specifically designed to attract those types of businesses.
The BVI Sandbox Regime, introduced in August 2020, “allows businesses experimenting with emerging technology to find the balance between regulatory oversight, and mitigating start-up costs for products under development,” said Ms. Jack.
The Appleby associate continued, “[The Sandbox] is designed to host firms and projects for longer periods compared to many others in the market. While the UK Sandbox is available for three to six months, the BVI offers 18 months, and then with the option for another six months after that. This allows greater time for market testing, and getting products up and running and ready for more fulsome regulation, if that is appropriate.”
Ms. Jack also stated, “We have political neutrality, tax advantages, good corporate lawyers and an engaged regulator, so the BVI has a lot to offer for companies generally and especially emerging tech companies.”
Simon Gray described the Incubator Fund as the “20-20-20” fund, because of its features including the maximum of 20 investors, minimum initial investment of $20,000, and maximum of $20 million in assets.
According to Mr. Gray, the Incubator Fund has “enjoyed massive traction with the hedge fund industry where it has been enormously popular.”
The BVI Finance manager said that the incubator fund’s “speedy setup” and low operating cost” is due to it being designed for “savvy and more professional investors and Ultra High Net Worth Individuals”, adding, “This is one reason they grew exponentially with the hedge fund industry and appear to be following a similar pattern with the digital space as well.”
He explained, “The BVI Incubator Fund lends itself very well to this type of innovation because some of the more onerous requirements you might find with certain funds, be they linked to administration and perhaps custody, are removed until such time that the incubator might transform into a different type of fund after a set period of time or after its value reaches a certain volume.”
BVI is in a Sweet Spot for Crypto
During the discussion on digital asset exchanges, Lodewijk Van Setten stated, “BVI has not introduced a specific virtual asset provider law yet, as seen in other jurisdictions. It really is in the sweet spot of the crypto sector at the moment.”
The senior counsel continued, “The BVI is right I think to be cautious, as the sector and its products are developing very quickly. What we are seeing...is that the products are becoming more complex, products will be caught by existing regulation.”
To that end, Hannah Terhune opined, “BVI has been viewed as late to the crypto game but in my view, it has played its cards well by waiting it out. Other countries rushed to legislate and clients are not lining up to rely on or work under those statutes. In my opinion, existing BVI law does cover most innovation in the block chain protocol space.”
Private Investment Fund, Venture Capital and Private Equity
Mr. Gray said that as a result of the need to stay innovative, BVI launched the Private Investment Fund regime, which he asserts, “lends itself very well to Venture Capital and Private Equity”. He also said that the private investment fund can also provide support to startups looking for increased capital.
“In this context, it is worth reminding everyone that in spite of being a comparatively small part of the world – an archipelago of 60 Islands – there are 140 BVI companies listed between Hong Kong Stock Exchange, the London Stock Exchange and the New York Stock Exchange.”
He continued, “This is quite an impressive result for our relatively small territory, and I think that is very much due to the very friendly business environment and a capability to innovate and change on a constant basis.”
To read the roundtable report, go to www.opalesque.com or use this direct link: https://www.opalesque.com/index.php?act=archiveRT&and=download_RT&iID=254.