30 ASIAN LEGAL BUSINESS CHINA • 亚洲法律杂志-中国版 FEBRUARY 2024 Offshore jurisdictions are an attractive prospect to virtual asset service providers (VASPs) for the same reasons they’ve always been attractive: Favourable regulatory environments, well-established financial service markets, tax-friendly policies, and strategic geographic locations. But global scrutiny over virtual assets, and lessons from economic crises across highly regulated markets have made policymakers weary of decentralised, digital finance practitioners, leading to increased regulation of VASPS in top offshore jurisdictions, including the British Virgin Islands, Cayman Islands and Jersey. Lawyers at offshore-focused international law firm Ogier are helping clients navigate these new regulations and compliance burdens. They say that as these offshore jurisdictions look to meet, and, in some cases, exceed these standards, the level of reliability and trust is set to increase without stifling growth or disrupting business. JERSEY In Jersey, operating a virtual asset (VA) business requires compliance with its anti-money laundering (AML), countering the financing of terrorism (CFT) and countering proliferation financing (CPF) regimes. All VA activities and VASPs are now required to apply to the regulator in Jersey, the Jersey Financial Services Commission (JFSC), for registration for supervision for AML purposes before commencing any VA activities. Alexander Curry, a Jersey-based partner at Ogier, says that applicants are required to provide a business risk assessment, policies and procedures for dealing with the AML risk and be able to demonstrate compliance readiness. “AML is, of course, not just a gating item; the JFSC has the ongoing right to visit the applicant, to review transactions, to review policies and procedures and relevant date to make sure businesses continue to comply with their AML obligations,” Curry explains. “In most cases, this will require an additional notification to the JFSC, but it will likely also mean an increase in administrative costs and ongoing compliance with recruitment and of additional personnel, training or amendments to specific policies and procedures. Relevant entities will need to implement a risk-based approach to VAs which includes collecting and analysing relevant customer data such as IP addresses and detection of IP address anonymisation, among other methods for reducing risk. Regulators will need to be shown evidence of the AML measures that entities handling virtual assets are putting in place. The use of a correctly configured blockchain analytics tool to screen wallets and monitor transactions along with improvements to CDD checks provides an important part of that evidence,” Curry adds. “Criminal penalties can be levied in Jersey for breach of the law, and there is very little flex within the system for those who do not comply,” he says. That being said, the country’s regulators work closely with industry participants to make the compliance process as smooth as possible. BRITISH VIRGIN ISLANDS The BVI Virtual Assets Service Providers Act, 2022 (BVI VASPA), which came into force in February 2023, empowers the BVI Financial Services Commission (BVI FSC) to regulate the carrying on by BVI companies of virtual assets services while still fostering an environment in which businesses can innovate and be successful. The BVI VASPA defines a virtual asset as “a digital representation of value that can be digitally traded or transferred and can be used for payment or investment purposes.” The act provides a registration and licensing regime for any person offering a “virtual asset service” in the course of a business. OFFSHORE In early 2023, offshore jurisdictions like Jersey, Cayman Islands and British Virgin Islands passed legislation that indicated they were welcoming virtual assets service providers (VASPs). Lawyers share that this will allow VASPs to anchor in the said jurisdictions despite increased regulatory burdens, compliance costs and stringent penalties. 2023年初，泽西岛、开曼群岛、英属维尔京群岛等离岸司法管辖区颁布了认可虚拟资产服务提供者（VASPs）的新立法。 律师们表示，即便面临着加剧的监管负担、合规成本和严苛处罚，VASPs仍将对上述司法管辖区产生更大兴趣。 BY NIMITT DIXIT SAFE HARBOURS 避风港
RkJQdWJsaXNoZXIy MjA0NzE4Mw==