Lucy Frew
Partner
Cayman Islands
The global regulatory landscape for virtual asset service providers (VASPs) is changing faster than ever.
With regulators sharpening their focus on anti-money laundering and counter-terrorist financing obligations, the cost and complexity of compliance is increasing across many jurisdictions.
The digital assets sector is no different. For some VASPs, these developments are raising a vital question: which jurisdiction will be the best place for my business to operate?
Rise of regulation
Virtual assets are inherently borderless, but regulatory approach can be local. Many governments are now putting in place or updating their frameworks to address the rise of digital assets, often in line with recommendations from the FATF.
While these changes are welcome in terms of building trust and credibility in the industry, they can also create a heavy compliance burden. In certain markets, the cost of adapting to new rules is proving prohibitive, leading VASPs to put greater consideration into where they should first register.
The jurisdiction in which you choose to operate your VASP business could shape the cost of regulatory compliance, your ability to scale efficiently and provide market credibility.
Under their respective regimes, international investment hubs like Bermuda, British Virgin Islands (BVI), Cayman Islands, Guernsey and Jersey have a proven track record of implementing robust regulatory frameworks that uphold global standards while creating an ecosystem that fosters innovation within digital assets.
Key considerations before registering a VASP
When looking at potential jurisdictions, businesses should consider:
- Which jurisdiction offers the most practical, proportionate regime that aligns with your business model?
- Is there an ecosystem of advisors, regulators and policymakers who understand fintech and digital assets?
- Does the jurisdiction's progressive digital asset framework boost credibility with investors, partners and customers?
On this trend, Dilmun Leach, partner in our global Fintech group explains: 'We've seen a notable uptick in the number of VASPs looking to secure registrations and licences across our jurisdictions. Careful consideration is, however, needed when choosing where to domicile your business. Each jurisdiction offers different solutions that could be best suited for different operating models and the long-term goals for the business.'
How we can help
Our Fintech team combines deep industry insight with specialist legal expertise. With expertise across Bermuda, BVI, Cayman Islands, Dubai, Guernsey, Hong Kong, Ireland, Jersey, London and Singapore, we cover all major time zones and have a track record of advising:
- Blockchain and digital asset businesses
- Exchanges, custodians and broker-dealers
- Fund managers and issuers
- Projects involving tokenisation and digital innovation
Our geographic footprint allows us to take a genuinely global approach, helping clients identify the most suitable home for their business. Beyond advising on current rules, we also work closely with policymakers, regulators and governments to help legislation move forward in step with innovation.
Ready to register your VASP?
Choosing the right jurisdiction can be critical to the long-term success of your VASP business. If you are weighing up your options, our team can provide a clear comparison of the legal and regulatory frameworks across our jurisdictions and guide you through the registration and licensing process from start to finish.
Get in touch with our Fintech team to discuss how we can help.
