Fintech services are actively developing today. Every month new corps are enlisted in many countries, which are ready to work in this sphere. Traditionally, most attention is paid to offshore zones. Such territories have the most applications to the controlling authorities for obtaining the relevant authorization documents.
However, the legislation in this area also changes regularly. Therefore, applicants for a VASP license in offshore should take them into account, as the rules and prerequisites for those who would like to issue such permissions may change.
Let us take a closer look at the countries and regions with the loftiest concentration of applications among newly established or existing legal entities. Therefore, we will be primarily interested in the changes to VASP in Bermuda, the Virgin Islands, the Cayman Islands, Guernsey, and Jersey.
Bermuda
The local regulator has issued 16 licenses to new applicants in the past year. Since the decision to issue a license is not made in one month, this is quite a large number of players in the market.
The region welcomes requests for permits and is willing to consider applications from all companies that will meet local requirements. At the same time, the regulator can discuss with companies the process of obtaining a license and help them eliminate deficiencies in their applications. Traditionally, the greatest number of questions arise in applications where the organizational structure of legal entities is not quite correct. However, a productive dialog with the regulator in this region is possible for quick elimination of deficiencies.
Virgin Islands
The local authorities at the end of last year adopted a law regarding the regulation of virtual service providers and in February this year, it became effective. Due to the adopted law in the region, each company that seeks to provide such services must obtain the appropriate authorization from the regulatory body.
To date, all those who have not issued such a license are obliged to stop their activities. Otherwise, they will be recognized as violators of the law and the owners of such companies will face legal and financial liability. In addition, corporations that will be working in this area must adhere to strict obligations and help the region fight money laundering.
All companies that have been authorized must operate by local law and verify all transactions where the transaction (or the total number of transactions) exceeds the amount of one thousand US dollars. For those working with cryptocurrencies, every effort should be made to avoid being subject to transaction tracking laws and to comply with the local regulator’s rules.
Caymans
There is also a lot of activity in this region among those wishing to obtain a license. Last year alone, 18 applications were submitted to the country’s regulatory-authorities and the regulator approved some of the applications, but some were still denied.
Unlike other regions, in Cayman, the VASP legislation was introduced in 2 stages. Companies must first register and only then can they proceed to licensing. All applications for licensing have now either been processed or are being processed by the country’s regulatory-authorities.
Guernsey
Last year, the region passed the Credit, Loans, and Finance Act, which became effective last month. It requires all organizations to obtain licenses to do business in the region. Because of this law, the local regulator has a big responsibility, as the number of applications for licenses has expectedly increased. Moreover, representatives of the commission report that they are not sure that they will be able to consider all applications for licensing in time. But without a license, companies cannot operate even in August 2023.
This law covers the operation of 4 business lines:
- consumer lending;
- the operation of financial firms;
- operation of financial platforms;
- Provider services with virtual assets.
Representatives of the last line of business will be able to transfer funds, change them, store them, and provide other financial services if they have a license. They are also obliged to monitor all transactions and trace possible traces of fraud and other violations in this area.
Jersey
In February this year, the authorities of the region included VASP in the list of business areas that require licensing. The relevant permits are issued by the local Commission for Financial Services. All businesses had to submit applications by July 1 of this year. Appropriate permits are issued by the local financial services commission. All businesses had until July 1 of this year to apply.
On this island, the legislation states that digital assets are not certain investments.
Therefore, it is more advantageous for the region to set up companies in Jersey and operate through them. Such legal entities are subject to a zero tax rate on income derived from investment activities. There is also an agreement between Jersey and Singapore regarding the absence of double taxation on digital assets.
Who will help with the paperwork
As you can see, legislation even in offshore zones changes regularly. Since it is extremely difficult to keep track of all the changes on their own, many people turn to the relevant organizations for legal advice. Our company is ready to help in solving such issues. We are a team of true professionals who regularly monitor changes in laws and contact regulators in various offshore and non-offshore regions. We are ready to apply all our knowledge and experience to help our clients and advise them at all stages of obtaining a license.
Already during the first consultation we will study your application and tell you what needs to be corrected. This will significantly reduce the waiting period for a decision from the regulator, and while your competitors are correcting mistakes, you will be able to actively work in the market thanks to the license you have received.