Tuesday, October 2, 2018

Adam S. Tracy’s Crypto Country Review: British Virgin Islands

Cryptocurrency and hedge fund attorney Adam S. Tracy discusses the pros and cons of locating of your cryptocurrency fund or initial coin offering company in the British Virgin Islands.

So I’ve chatted about Belize, and Cook Islands, Cayman Islands, Estonia and the like, and I want to add one to the list. That’s the BVI’s (British Virgin Islands) as a possible crypto destination. And I’ve gotten increasingly frustrated with the Estonia, Switzerland crowd and like, I’ve talked about it before, and now Gibraltar adds to that list. What I don’t get is if you’re planning an ICO or something like that, and you’re looking for a friendly jurisdiction, why do you go to a jurisdiction that already has regulation that would inure or relate to your ICO that you’re going to be doing outside the country, right? You’re not going to domicile in Gibraltar for your ICO, so you can cater to and offer your ICO to like the 20,000 odd people who live in Gibraltar, right? That doesn’t make any sense. Same with Estonia, and to a lesser extent Switzerland. They’re small countries. You just won’t do it. Especially considering most ICOs, you’re just trying to attract US investors and the like. So it doesn’t make any sense why people want to flock to where there’s regulation, when there’s no regulation to be had somewhere else.

So I like the term crypto agnostic, right? I think that’s the best way to sort of evaluate jurisdictions, when you talk about the friendliness to cryptocurrency because the absence of regulation is probably the best thing that you’re going to get. And so the BVI’s is increasingly better only because they’ve yet to do anything that suggests that they’re going to regulate iCOs, whereas you see some activity within the Cayman Islands and other places where they want to regulate that and they want to regulate ICO’s that are domicile or rising from their borders, even though you may not be offering it to the the people of that jurisdiction. So it allows you this sort of extra jurisdictional bent, but now that’s being shut down when countries want to jump on the bandwagon of regulating crypto and ICOs that they don’t clearly understand.



So I like to BVI’s for a few reasons. Obviously, no tax – crypto agnostic – they have no crypto regulation. Just simply form an offshore corporation with the intent to offer the ICO outside of the BVI’s, which obviously you would. There’s no capital requirements. Switzerland’s very big with that, where you have to provide financial statements with your corporations – you have to have a certain requisite capital to form companies in certain instances, and you have to show a certain amount of net capital in certain instances. None of that’s worth it. Showing 50,000 marks on your books is not worth it, that does not make any sense. But the BVI’s provides, you know, really provides all of that. And I think what differentiates BVI’s versus a Belize or Nevis, which I’m a huge proponent of Nevis (and I think I’ve been one of the leading proponents of Nevis), but the BVI’s has got an optic bent that none of the other crypto friendly jurisdictions that I’ve talked about before it really have, right? Estonia may, Switzerland may, but the BVI’s – the optics are good. If you look at BVI’s, it’s the number one offshore incorporation definition by volume, right? And then you also look at the number of legitimate large traditional hedge funds, which are based there, there’s quite a few. Between Cayman Islands, that’s 90 some odd percent of the world’s hedge funds that are domicile in one or two locations.

So you have this optic bent, which I get the question more and more, and it’s like well, you know, will the optics be right? Will the optics be right if I want to approach high net worth? Would the Optics be right if I want to approach institutions? And I think that’s a pretty easy sell to say that the optics are correct with BVI’s, because it’s sort of an accepted offshore jurisdiction, whereas Nevis and Belize, while ideal and they suit the needs of crypto investors because that’s just the nature of crypto, you know, your more traditional investor may not find BVI’s to be so piratey for lack of a better word. So, for the tax reasons, the lack of regulation, the crypto agnosticism (as I like to call it), as well as very affordable in corporation fees (about twice that at Nevis), and no capital requirements, and then obviously privacy. Right? Obviously privacy is a huge thing in crypto, and you do have some fairly strict (privacy in the BVI’s), not as well as – not as good and strong as Belize and In Cook Islands, but you can incorporate something and understand with a fair degree of certainty that it’ll be a private corporation – a private transaction.

So that’s my taking on the BVI’s. it’s coming up. That can obviously change. I can’t see anything or haven’t been able to research anything that would indicate that they are attempting to regulate crypto. I think there was some ground swell of support to sort of not regulate it, which again, the absence of regulation is what you obviously would be looking for. It’s not running to places like Estonia and Gibraltar that passed laws, right? That doesn’t quite make a great deal of sense to me, but people will undoubtedly disagree. So feel free to comment. Feel free to comment below as you do. So. Hey, check me out – TracyFirm.com.

A former competitive rugby player, serial entrepreneur and, trader attorney, Adam S. Tracy offers over 17 years of progressive legal and compliance experience in the areas of corporate, commodities, cryptocurrency, litigation, payments and securities law. Adam’s experience ranges from commodities trader for oil giant BP, initial public offerings, M&A, to initial coin offerings, having represented both startups to NASDAQ-listed entities. As an early Bitcoin adapter, Adam has promoted growth of cryptocurrency and offers a unique approach to representing crypto-clients. Based in Chicago, IL, Adam graduated from the University of Notre Dame with dual degrees in Finance and Computer Applications and would later obtain his J.D. and M.B.A. from DePaul University. Adam lives outside Chicago with his six animals, which is illegal where he lives.

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