BVI Finance conducted the second part of its series, "Embracing the Crypto Revolution: Positioning the BVI as a Global Hub for Virtual Assets," during its recent Breakfast Forum. The event was moderated by Elise Donovan, CEO of BVI Finance. Expert speakers included Kishelle Blaize-Cameron, Deputy Director of Specialized Supervision at the BVI Financial Services Commission, and Ayana Hull, Head of Private Wealth and Regulatory at Harneys.
The forum delved into the intricacies of the BVI’s regulatory framework for virtual asset service providers (VASPs), discussing application processes, emerging trends, and the balancing act between fostering innovation and maintaining robust regulation. Highlights included:
• In-depth Regulatory Insight
Ms. Blaize-Cameron illuminated the processes and challenges in regulating high-risk virtual asset businesses, emphasizing the need for a risk-based approach and robust communication with stakeholders.
Blaize-Cameron explained the sector’s volatility, noting, “It changes so often that things that would have been relevant two years ago are no longer relevant today. That's a challenge, and that requires us to be a little bit more agile. Our supervisory regime requires us to have systems available to adapt to changes because they're coming quickly and fast.”
• Industry Trends and Compliance
Ms. Hull spoke on the industry’s shift towards compliance and the growing comfort with international regulatory requirements, highlighting the transition of the virtual asset sector towards more stability and understanding.
“The industry, as gatekeepers, have to comply with the FATF standards and the legislation, to mitigate risks, and to maintain the BVI’s reputation.” We have an obligation to make sure that we uphold the compliance function of the industry, Hull highlighted.
• Application Processing and Challenges
Both Ms. Blaize-Cameron and Ms. Hull addressed the complexities and nuances in processing VASP applications, underscoring the Commission's commitment to thorough and quality assessments without unduly stifling business growth.
Blaize-Cameron said, “It's complex. It's new. It's cross-border. We must undertake quality assessments to ensure that we have a viable and quality business in the jurisdiction going forward.”
She added, “There are some characteristics that are attached to virtual assets that elevate the inherent risks attached to the possibility of nefarious activities, like money laundering, terrorist financing, and proliferation financing. Our expectation is that entities that are using the products can identify the risks and present to us proper risk management structures that mitigate those risks to the client, the company, and to the jurisdiction.”
“Persons seeking authorization or licensing from the Commission, as a part of the fit and proper assessment, have to demonstrate that there is financial viability within the thing that they're seeking to be authorized.”
“Then specifically to VASP, we expect to see sufficient capital - amounts that are commensurate with the nature, size and complexity of the application. Given the specific inherent risks, we expect to see professional indemnity insurance that captures certain types of risks, for example, loss of customer assets or issues in relation to data breaches, et cetera,” said Blaize-Cameron
• International Cooperation and Compliance
The forum stressed the importance of international cooperation in regulating VASPs, along with the need for comprehensive compliance mechanisms to counteract fraud and nefarious activities.
“Most of the sector operate in multiple jurisdictions and it's important for us to collaborate and share information with our co-regulators and supervise in this space in the application process. Collaboration reduces the ability for bad actors to commit nefarious activity across borders,” said Blaize-Cameron.
• Future Prospects
Looking forward, both Ms. Blaize-Cameron and Ms. Hull expressed optimism about the BVI’s positioning as a leading jurisdiction for virtual assets, balancing regulatory diligence with industry growth and innovation.
Blaize-Cameron affirmed, “We are committed to supporting an environment that is inviting to this sector to virtual assets service providers.”
But she cautioned, “Innovation cannot come at a cost of compromising the oversight and robustness that this sector requires. We will endeavor, as best as possible, to ensure that the regulatory framework that we place on licensees is appropriate and commensurate.”
She said, “We will continue to collaborate with the industry. We’ve collaborated quite extensively coming into this and we intend to continue to utilize those mechanisms of collaboration so that we are sure that what we're putting out are the best products possible.”
The session wrapped up with the experts answering questions about specific regulatory nuances and the VASP application process. The forum was an invaluable opportunity for professionals in the financial services industry to gain first-hand insights from leading experts in the field.
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