{"kind":"expression","expression":{"expr_id":"589","doc_id":"589","label":"2024 Revision","is_as_enacted":"f","commenced_on":"2024-02-15","superseded_on":null,"valid_from":"2024-02-15","valid_to":null,"is_current":"t","incorporating":"[\"Act 7\/2023 - Virtual Asset (Service Providers) (Amendment) Act, 2023 - LG16\/2023\/s7 - 26-May-2023\"]","akn_expr_iri":"\/akn\/ky\/act\/2020\/14\/eng@2024-02-15","akn_envelope":"{\"_canary\": {\"iri\": {\"work\": \"\/akn\/ky\/act\/2020\/14\", \"expression\": \"\/akn\/ky\/act\/2020\/14\/eng@2024-02-15\", \"manifestation\": \"\/akn\/ky\/act\/2020\/14\/eng@2024-02-15.pdf\"}, \"pdf\": {\"md5\": \"c1e603763a6bb0e7867f6504890e4fc3\", \"path\": \"\/Users\/q\/kyleg-data\/working\/PRINCIPAL\/2020\/2020-0014\/2020-0014_2024 Revision.pdf\", \"pages\": 44, \"filename\": \"2020-0014_2024 Revision.pdf\"}, \"errors\": [], \"extraction\": {\"model\": null, \"stats\": {\"word_count\": 15205, \"paragraph_count\": 42, \"text_char_count\": 96499}, \"usage\": null, \"method\": \"pymupdf-text\", \"version\": \"kyleg-akn-1.0\", \"extracted_at\": \"2026-06-22\"}, \"classification\": \"text_layer\", \"validation_flags\": [], \"docai_processor_id\": null}, \"akomaNtoso\": {\"act\": {\"body\": [{\"eId\": \"sec_n1\", \"num\": null, \"text\": \"Virtual Asset (Service Providers) Act (2024 Revision) 16. Part 3 \u2013 Sandbox licensees 17. 18. 19. 20. 21. Part 4 - Decisions to licence, register, approve issuances 22. 23. Part 5 \u2013 The Authority: powers and enforcement 24. 25. 26. 27. 28. 29. Appeals 30. 31. 32. 33. 34. Part 6 \u2013 General 35. 36. 37. 38. 39. 40. 41. ENDNOTES Virtual Asset (Service Providers) Act (2024 Revision) (2024 Revision) PART 1 - Preliminary\", \"element\": \"section\", \"heading\": null}, {\"eId\": \"sec_1\", \"num\": \"1.\", \"text\": \"Short title and commencement 1. This Act may be cited as the Virtual Asset (Service Providers) Act (2024 Revision) and came into operation in accordance with the Virtual Asset (Service Providers) Law, 2020 (Commencement) Order, 2020 [SL 137 of 2020] and the Virtual Asset (Service Providers) (Amendment) Act, 2020 (Commencement) Order, 2021 [SL 1 of 2021]. Provisions not specified therein shall come into force on such date as the Cabinet may by Order specify.\", \"element\": \"section\", \"heading\": null}, {\"eId\": \"sec_2\", \"num\": \"2.\", \"text\": \"Interpretation 2. (1) In this Act \u2014 \u201capplication fee\u201d means the fee that is payable by an applicant for registration or licensing under section 5(3); \u201cassessment fee\u201d means the fee that is submitted with an application for registration or a licence to the Authority under section 5(1); \u201cAuthority\u201d means the Cayman Islands Monetary Authority established under section 5(1) of the Monetary Authority Act (2020 Revision) or such other authority as the Cabinet may by order appoint; \u201cbeneficial owner\u201d has the same meaning as in regulation 2 of the Anti-Money Laundering Regulations (2023 Revision); Virtual Asset (Service Providers) Act (2024 Revision) \u201cbeneficiary\u201d, in relation to a transfer of virtual asset, means the natural or legal person or the legal arrangement that will own the virtual asset on completion of a transfer; \u201ccompetent authority\u201d has the same meaning as in section 2 of the Proceeds of Crime Act (2024 Revision); \u201cexempted limited partnership\u201d has the meaning assigned by section 2 of the Exempted Limited Partnership Act (2021 Revision);1 \u201cexisting licensee\u201d means a person that is licensed under any of the other regulatory laws and is not a virtual asset service licensee or a sandbox licensee under this Act; \u201cfiat currency\u201d means currency that is issued by the relevant body in a country or by a government that is designated as legal tender in its country of issuance through, among other things, government decree or law; \u201cFinancial Action Task Force\u201d means the task force established by the Group of Seven to develop and promote national and international policies to combat money laundering and terrorist financing; \u201cfintech service\u201d means a service that uses innovative technology to improve, change or enhance financial services but is not a virtual asset service; \u201cfintech service provider\u201d means a person who is carrying on fintech service in or from within the Islands but does not provide virtual asset service; \u201cissuance request\u201d means a request submitted to the Authority prior to a virtual asset issuance and containing such information as may be specified by the Authority; \u201cissuance of virtual assets\u201d or \u201cvirtual asset issuance\u201d means the sale of newly created virtual assets to the public in or from within the Islands in exchange for fiat currency, other virtual assets or other consideration but does not include the sale of virtual service tokens; \u201climited liability partnership\u201d means a limited liability partnership registered under section 18(4) or 33(4) of the Limited Liability Partnership Act (2023 Revision);2 \u201cnewly created virtual assets\u201d means virtual assets which have never been sold, offered or distributed to the public; \u201cnon high-risk jurisdiction\u201d means any jurisdiction that \u2014 (a) is not on the list of high risk jurisdictions subject to a call for action issued by the Financial Action Task Force; or (b) is not designated by the Cabinet as a jurisdiction which has serious deficiencies in its compliance with recognised international standards for combating money laundering and the financing of terrorism, under the Proceeds of Crime Act (2024 Revision); Virtual Asset (Service Providers) Act (2024 Revision) \u201cobliged entity\u201d means a financial institution, person or group of persons that provides a virtual asset service that is licensed or registered and is supervised for virtual asset services by a government regulatory body in another non-highrisk jurisdiction;3 \u201coperator\u201d, in relation to a virtual asset trading platform, means a person or group of persons that exerts effective control over the activities of a virtual asset trading platform however, in the absence of a single entity or group that exerts effective control over the platform, the operator shall be considered to be the owner of the entity under which the platform operates; \u201coriginator\u201d, in relation to a transfer of virtual asset, means \u2014 (a) the natural person, legal person or legal arrangement that places an order with the virtual asset service provider for the virtual asset transfer; or (b) where the transfer is carried out by a virtual asset service provider on behalf of a client or other third party, the client or third party who owned the virtual asset immediately before the transfer; \u201cpartnership\u201d has the meaning assigned by section 3 of the Partnership Act (2024 Revision);4 \u201cregistered person\u201d means a person registered in accordance with section 6; \u201cregulatory laws\u201d has the same meaning as in section 2 of the Monetary Authority Act (2020 Revision); \u201csandbox licence\u201d means a licence that is granted in accordance with Part 3 of this Act; \u201csecurities investment business\u201d has the same meaning as in section 2 of the Securities Investment Business Act (2020 Revision); \u201csenior officer\u201d means a director, managing director, president, chief executive officer, partner, managing partner, general partner, ultimate partner, manager or someone who has a similar control function; \u201cthreshold\u201d, in relation to a virtual asset issuance, means a prescribed amount in fiat currency or equivalent that can be raised by the public issuance of virtual assets within a given timeframe by the virtual asset issuer; \u201ctransfer of virtual asset\u201d means any transaction carried out on behalf of an originator with a view to making the virtual asset available to a beneficiary; \u201cvirtual asset\u201d means a digital representation of value that can be digitally traded or transferred and can be used for payment or investment purposes but does not include a digital representation of fiat currencies; \u201cvirtual asset custodian\u201d means a licensee who provides virtual asset custody services in or from within the Islands; Virtual Asset (Service Providers) Act (2024 Revision) \u201cvirtual asset custody service\u201d means the business of safekeeping or administration of virtual assets or the instruments that enable the holder to exercise control over virtual assets; \u201cvirtual asset service\u201d means the issuance of virtual assets or the business of providing one or more of the following services or operations for or on behalf of a natural or legal person or legal arrangement \u2014 (a) exchange between virtual assets and fiat currencies; (b) exchange between one or more other forms of convertible virtual assets; (c) transfer of virtual assets; (d) virtual asset custody service; or (e) participation in, and provision of, financial services related to a virtual asset issuance or the sale of a virtual asset; \u201cvirtual asset service licence\u201d means a licence granted under section 8; \u201cvirtual asset service provider\u201d has the meaning set out in section 3; and \u201cvirtual service token\u201d means a digital representation of value which is not transferrable or exchangeable with a third party at any time and includes digital tokens whose sole function is to provide access to an application or service or to provide a service or function directly to its owner. (2) For the purposes of this Act, \u201cvirtual asset trading platform\u201d means a centralised or decentralised digital platform \u2014 (a) which facilitates the exchange of virtual assets for fiat currency or other virtual assets on behalf of third parties for a fee, commission, spread or other benefit; and (b) which \u2014 (i) holds custody of or controls virtual assets on behalf of its clients to facilitate an exchange; or (ii) purchases virtual assets from a seller when transactions or bids and offers are matched in order to sell them to a buyer, and includes its owner or operator, but does not include a platform that only provides a forum where sellers and buyers may post bids and offers and a forum where the parties trade in a separate platform or in a peer-to-peer manner. (3) For the purpose of the definition of \u201cvirtual asset trading platform\u201d, where a single entity or group that controls the platform cannot be identified, the operator of the platform shall be deemed the owner of the entity under which the platform operates.\", \"element\": \"section\", \"heading\": null}, {\"eId\": \"sec_3\", \"num\": \"3.\", \"text\": \"Meaning of \u201cvirtual asset service provider\u201d 3. (1) For the purposes of this Act, a person is a virtual asset service provider if the person is \u2014 Virtual Asset (Service Providers) Act (2024 Revision) (a) a company incorporated under the Companies Act (2023 Revision); (b) a general partnership established under the Partnership Act (2024 Revision); (c) a limited partnership registered under the Partnership Act (2024 Revision); (d) an exempted limited partnership registered under the Exempted Limited Partnership Act (2021 Revision); (e) a foreign company registered under Part IX of the Companies Act (2023 Revision); (f) a limited liability company formed and registered under the Limited Liability Companies Act (2023 Revision); or (g) a limited liability partnership formed and registered under the Limited Liability Partnership Act (2023 Revision), and provides virtual asset service as a business or in the course of business in or from within the Islands and is registered or licensed in accordance with this Act or is an existing licensee that is granted a waiver by the Authority under section 16. (2) For the purposes of this Act, virtual service tokens are not virtual assets and a person or legal arrangement that provides services that involve virtual service tokens only are not required to have a licence or registration under this Act.\", \"element\": \"section\", \"heading\": null}, {\"eId\": \"sec_4\", \"num\": \"4.\", \"text\": \"Registration or licence required 4. (1) Subject to subsections (2) and (3), a person shall not carry on, or purport to carry on, virtual asset service in or from within the Islands unless that person \u2014 (a) is a registered person; (b) in the case of the provision of virtual asset custodial services or the operation of a virtual asset trading platform, holds a virtual asset service licence; (c) is an existing licensee that has been granted a waiver from the Authority under section 16; or (d) holds a sandbox licence, in accordance with this Act. (2) A natural person shall not carry on, or purport to carry on, in or from within the Islands virtual asset service as a business or in the course of business. (3) For the purposes of subsections (1) and (2), a person purports to carry on virtual asset service where the person \u2014 (a) uses one or more words that connote virtual asset service either in English or in any other language, in the description or title under which the person carries on business; Virtual Asset (Service Providers) Act (2024 Revision) (b) makes a representation in a document or makes a representation in any other manner that the person is carrying on virtual asset service; or (c) otherwise holds out as carrying on virtual asset service. (4) A contract, transaction, obligation or instrument entered into by any person shall not be rendered unenforceable because it was entered into in connection with virtual asset service carried on by that person in contravention of subsection (1) or (2).\", \"element\": \"section\", \"heading\": null}, {\"eId\": \"sec_5\", \"num\": \"5.\", \"text\": \"Fees 5. (1) An application for registration or a licence shall be accompanied by the prescribed non-refundable assessment fee under subsection (3). (2) On the Authority\u2019s decision to approve an application for registration or a licence, the Authority shall notify the applicant of its approval and the applicant shall pay the application fee as may be specified by the Authority. (3) The application fee shall be such amount that is payable by an applicant for registration or licensing after assessment and approval of the application by the Authority, such fee being within the prescribed range and determined by the Authority based on, but not limited to, the nature, size, scope and complexity of the virtual asset service or fintech service set out in the application less the assessment fee. (4) The application fee shall be paid by the applicant no later than thirty days after being notified of the fee by the Authority and where the fee is not paid the approval shall be cancelled by the Authority. (5) A licensee or a registered person shall, on or before 15th January in each year, pay the prescribed renewal fee and there shall be payable by a licensee or registered person who fails to pay the renewal fee by that date a surcharge of one-twelfth of that fee for every month, or part of a month, after 15th January in each year that the fee is not paid. (6) The licence or registration in respect of which the renewal fee remains unpaid for three full months after 15th January in any year shall lapse immediately but if, within a period of one month after the date of lapse, the person who held the licence or registration prior to its lapse pays \u2014 (a) the prescribed renewal fee; (b) the surcharges due under subsection (5); and (c) an administration fee of ten per cent of the renewal fee, the licence or registration may be renewed for the period from 1st January to 31st December, inclusive, of the year in question. (7) The Authority may, for good cause, waive any additional fee imposed under subsection (5). Virtual Asset (Service Providers) Act (2024 Revision) (8) If the prescribed renewal fee referred to in subsection (5) is not paid on or before the 15th day of January in each year, the unpaid annual fee may be sued for by the Crown by action as a civil debt and the Crown may require, and the court may order, the payment of any penalties accrued in respect of the late payment of the fee. Part 2 \u2013 Registered persons and virtual asset service licensees Registration\", \"element\": \"section\", \"heading\": null}, {\"eId\": \"sec_6\", \"num\": \"6.\", \"text\": \"Application for registration 6. (1) Subject to subsection (3), a person, not being an existing licensee, who \u2014 (a) at the commencement of this Act is carrying on virtual asset service for which a licence is not required under this Act; or (b) wishes to carry on virtual asset service for which a licence is not required under this Act, shall apply in the prescribed form to be a registered person under this Act and submit the application along with the prescribed assessment fee to the Authority. (2) The Authority in determining whether to approve the application from a person in subsection (1), shall consider \u2014 (a) the matters set out in section 22; and (b) whether \u2014 (i) the applicant should apply instead for a virtual asset service licence or a sandbox licence as the virtual asset service is one for which a licence is required; or (ii) the applicant should apply instead for registration or a licence under one of the other regulatory laws as the virtual asset service is similar in nature to an activity or service for which registration or a licence is required under another regulatory law and for which supervision under this Act is not required. (3) The Authority shall, further to its determination under subsection (2) that the applicant is suitable to be registered, register the applicant upon payment of the application fee or reject the application for registration if the applicant is found to be unsuitable. (4) Where an application for registration has not been approved, the Authority shall notify the applicant of its decision and the reasons therefor. (5) An applicant for registration or a registered person shall notify the Authority within fifteen days of any changes to the information provided under subsection (1) that occurs after submission of the application. Virtual Asset (Service Providers) Act (2024 Revision) (6) If a registered person engages in activities for which a licence is required under this Act, the Authority shall cancel the registration and require the registered person to apply for a licence. (7) A registered person shall not publicly state, imply or convey that it is licensed or regulated in the Islands. (8) An application under this section shall include such information as may be prescribed and any information that the Authority requires in order to make a determination. (9) A person who contravenes subsection (5) commits an offence and is liable on summary conviction to a fine of twenty thousand dollars.\", \"element\": \"section\", \"heading\": null}, {\"eId\": \"sec_7\", \"num\": \"7.\", \"text\": \"Registered person: virtual asset issuance 7. (1) A registered person shall not issue virtual assets directly to members of the public in excess of the prescribed threshold.5 (1A) A registered person shall, prior to issuing virtual assets, submit an issuance request to the Authority in the prescribed form and obtain the approval of the Authority prior to the issuance.6 (2) Where a virtual asset issuance is within the prescribed threshold and involves the transfer or exchange of virtual assets or fiat currency, a registered person shall maintain records containing such information as may be specified by the Authority for every transaction of the issuance involving the public and the registered person shall make the records available to the Authority when requested. (3) Notwithstanding subsections (1), (1A) and (2), a registered person may, in accordance with subsection (4), engage one or more virtual asset trading platforms that are obliged entities or licensed under this Act for the issuance of newly created virtual assets over the prescribed threshold and the virtual assets shall be issued by way of these virtual asset trading platforms.7 (4) A registered person under subsection (3) shall, prior to engaging an obliged or licensed virtual asset trading platform for the issuance of newly created virtual assets, submit a virtual asset issuance request to the Authority in the prescribed form and obtain the approval of the Authority. Virtual asset service licence\", \"element\": \"section\", \"heading\": null}, {\"eId\": \"sec_8\", \"num\": \"8.\", \"text\": \"Application for virtual asset service licence 8. (1) A person who \u2014 (a) wishes to provide virtual asset custody services or wishes to operate a virtual asset trading platform; (b) at the commencement of this Act is providing or operating any of the services referred to in paragraph (a); Virtual Asset (Service Providers) Act (2024 Revision) (c) is an existing licensee under this Act and has been directed by the Authority to obtain a virtual asset service licence; or (d) is providing virtual asset service and has been directed by the Authority to obtain a virtual asset service licence, may apply for a virtual asset service licence in the prescribed form. (2) The Authority shall, in relation to an application received under subsection (1), either \u2014 (a) grant a virtual asset service licence; (b) direct the applicant to apply for a sandbox licence in accordance with section 19(1); (c) direct the applicant to apply for a licence under one of the other regulatory laws where the virtual asset service is similar in nature to a service for which registration or a licence is required under another regulatory law and for which supervision under this Act is not required; or (d) refuse the application to grant the licence. (3) An application under this section shall include such information as may be prescribed and any additional information as may be specified by the Authority that enables it to make a determination and the application shall be accompanied by the prescribed assessment fee. (4) The Authority in determining whether to approve the application from a person in subsection (1), shall consider the matters set out in section 22 and whether \u2014 (a) an approval of the application is against the public interest; (b) the applicant has \u2014 (i) personnel with the necessary skills, knowledge and experience; (ii) facilities, books, records and accounting systems; (iii) adequate capital and cybersecurity measures, as the Authority considers appropriate having regard to the size, scope and complexity of the business; and (c) the applicant has complied with such other requirements under this Act for which the Authority requests the applicant\u2019s compliance, and where the Authority is satisfied, it shall notify the applicant of its approval of the application and the application fee under section 5(3). (5) On payment of the application fee, the Authority shall grant the licence to the applicant and the licence shall set out the specific service under subsection (1) that the licensee is permitted to carry on. (6) Where the Authority has granted a licence under this section, it shall, as soon as reasonably possible after the grant, publish notification of such grant in the Gazette. Virtual Asset (Service Providers) Act (2024 Revision) (7) Where an application for a licence has not been approved, the Authority shall notify the applicant of its decision and the reasons therefor. (8) The Authority may impose \u2014 (a) regulatory requirements on a virtual asset service licensee as the Authority considers necessary based on \u2014 (i) its assessment of the virtual asset service provided by the licensee; (ii) the nature of the supervision required for the virtual asset service; (iii) the safety and soundness of the method by which the virtual asset service is offered to the public; or (iv) where applicable, any licence held under another regulatory law; and (b) further restrictions or prohibitions on the use of technology or practices that, in the opinion of the Authority, may disrupt or prejudice \u2014 (i) the functions of the Authority; (ii) the interests of the public; or (iii) the financial services in the Islands. (9) The Authority shall maintain a current register of licensees setting out the business address of the licensee and details of the activities that the licensee is permitted to carry on and such other information as may be prescribed. (10) A licensee or an applicant for a licence shall notify the Authority within fifteen days of any changes to the information provided under subsection (3) that occurs after submission of the application.\", \"element\": \"section\", \"heading\": null}, {\"eId\": \"sec_9\", \"num\": \"9.\", \"text\": \"General requirements for virtual asset service providers 9. (1) The Authority may, at the virtual asset service provider\u2019s expense, require a virtual asset service provider to provide an auditor\u2019s report, prepared by an independent auditor, on the anti-money laundering systems and procedures for compliance with the Anti-Money Laundering Regulations (2023 Revision). (2) A virtual asset service provider shall prepare accounts annually and make the accounts available for inspection upon request by the Authority at the registered office at such reasonable time as the Authority may specify. (3) A virtual asset service provider shall \u2014 (a) ensure that \u2014 (i) its senior officers and trustees are fit and proper persons to hold the respective positions; and (ii) its beneficial owners are fit and proper persons to have such control or ownership; (b) take such steps as may be necessary to protect and secure the personal data and virtual assets of its clients; Virtual Asset (Service Providers) Act (2024 Revision) (c) ensure that all communications relating to the virtual asset service are accurate; (d) comply with the Anti-Money Laundering Regulations (2023 Revision) and other laws relating to the combating of money laundering, terrorist financing and proliferation financing; (e) for the purpose of ensuring compliance with the Anti-Money Laundering Regulations (2023 Revision), put in place anti-money laundering systems and procedures; and (f) designate an employee as the officer with responsibility for the procedures for combating money laundering, terrorist financing and proliferation financing. (4) A virtual asset service provider shall \u2014 (a) have a registered office in the Islands; (b) provide documents, statements or such other information that may be required by the Authority to enable it to properly perform any of its functions under this Act; (c) notify the Authority of \u2014 (i) any licence or registration in another jurisdiction; (ii) the opening of an office or establishing a physical presence in another jurisdiction; (iii) any penalties that are imposed or enforcement actions taken against it in another jurisdiction; or (iv) the holding of, or the acquisition of, a controlling interest in another person or legal arrangement engaged in virtual asset service; and (d) provide such other information as may be specified by the Authority. (5) When performing a transfer of virtual assets, a virtual asset service provider shall collect and maintain information on the beneficiary and originator of the transfer in accordance with the Anti-Money Laundering Regulations (2023 Revision) and any additional information specified by the Authority, for all transfers performed and comply with any other requirements outlined therein and the records shall \u2014 (a) be made available, at the request of the Authority or any competent authority, through its registered office; and (b) where a request for information is made under paragraph (a), be provided within forty-eight hours of receipt of the request. (6) A virtual asset service provider shall not engage in securities investment business unless the person is registered or is a licensee under the Securities Investment Business Act (2020 Revision) or has been exempted from registration Virtual Asset (Service Providers) Act (2024 Revision) or licensing by the Authority under the Securities Investment Business Act (2020 Revision).8 (7) The Authority may impose additional requirements specific to a virtual asset service on a virtual asset service provider to ensure compliance with the AntiMoney Laundering Regulations (2023 Revision). (8) A virtual asset service provider shall not appoint \u2014 (a) a senior officer or trustee; or (b) an anti-money laundering compliance officer, without the prior approval of the Authority. (9) The Authority shall not grant the approval specified in subsection (8) where a senior officer, trustee or anti-money laundering compliance officer is not a fit and proper person. (10) For the purposes of this section, \u201caccounts\u201d include unaudited reports. (11) A person who contravenes subsections (1) and (8) commits an offence and is liable on summary conviction to a fine of twenty thousand dollars.\", \"element\": \"section\", \"heading\": null}, {\"eId\": \"sec_10\", \"num\": \"10.\", \"text\": \"Requirements: virtual asset custody services 10. (1) The Authority may, where necessary, impose requirements on a licensee that provides virtual asset custody services including \u2014 (a) net worth requirements; (b) reporting requirements; (c) disclosures to clients concerning the transparency of operations including the risks associated with the custodial arrangements, internal safeguards, the methods of access to virtual assets held and insurance arrangements; (d) requirements for the safekeeping of client assets, including the segregation of assets, insurance requirements and cybersecurity measures; and (e) any other requirement the Authority determines is in the best interest of the beneficial owners of the assets held by the licensee. (2) A virtual asset custodian shall not, unless specifically agreed to by the beneficial owners of the virtual assets \u2014 (a) encumber; or (b) have encumbered by a third party, virtual asset deposits held on behalf of clients. (3) A virtual asset service licensee that is providing virtual asset custody services shall \u2014 (a) enter into a custodial arrangement with the owner of a virtual asset listing at a minimum \u2014 Virtual Asset (Service Providers) Act (2024 Revision) (i) the manner in which the virtual assets are to be held; (ii) the transactions that the custodian is permitted to engage in and the manner in which the transactions are to be conducted; (iii) disclosures relating to the risks present in the safekeeping of the virtual assets and any mitigating factors; (iv) fees, spreads or other remuneration to the custodian; (v) the manner in which the client may access the virtual assets and how the custodial arrangement may be terminated; (vi) information related to the licensee\u2019s security safeguards; (vii) remedies available to the owner upon the unforeseeable loss of the virtual assets by the custodian; and (vii) any other information specified by the Authority; (b) maintain information technology best practices relating to virtual assets held in custody; (c) ensure that all ancillary or subsidiary proceeds relating to virtual assets held in custody shall accrue to the benefit of the owner of the virtual asset unless otherwise agreed to with the owner in writing; (d) take such steps as may be necessary to safeguard the virtual assets held on behalf of third parties; and (e) have adequate safeguards against theft and loss. (4) A licensee providing virtual asset custody services shall comply with applicable requirements under this section and a person who contravenes this provision commits an offence and is liable on conviction to a fine of one hundred thousand dollars.\", \"element\": \"section\", \"heading\": null}, {\"eId\": \"sec_11\", \"num\": \"11.\", \"text\": \"Requirements: virtual asset trading platforms 11. (1) The Authority may, where necessary, impose requirements on a licensee that operates a virtual asset trading platform including \u2014 (a) the nature of the access of users to the platform; (b) the type of client that it may market its services to; (c) the types of virtual assets that may, or may not, be traded on the virtual asset trading platform; (d) requirements for the listing of virtual assets; (e) net worth and reporting requirements; (f) identification and management of conflicts of interest and price discovery mechanisms to prevent price manipulation and other unfair trading practices; Virtual Asset (Service Providers) Act (2024 Revision) (g) disclosures to clients concerning the transparency of operations of the virtual asset trading platform including disclosures to clients on custodial arrangements and insurance against theft or loss of assets; (h) the monitoring and supervision of trading activity that is taking place on the virtual asset trading platform and the freezing and suspension of trading of virtual assets; (i) the technology used in the operation of the trading platform including information on the resiliency of the platform and cybersecurity safeguards in place; (j) the clearing and settlement process for transactions between buyers and sellers of virtual assets; (k) the provision of financing for the purchase of virtual assets; (l) controls to mitigate against money laundering, terrorist financing and proliferation financing; and (m) any other requirement that the Authority considers to be in the best interest of the users of the virtual asset trading platform. (2) A licensee that operates a virtual asset trading platform shall not \u2014 (a) provide financing to its clients for the purchase of virtual assets unless disclosures are made to clients regarding the terms of, and the risk of, the financing; (b) engage in trading or market making behaviour for its own account which could be detrimental to the interests of its clients unless these activities are necessary for the operation of the virtual asset trading platform and these activities have been disclosed to the clients of the platform; (c) allow a virtual asset to be traded on its platform unless it has assured itself that the virtual asset is not presented in a deceiving manner or in a manner that is meant to defraud holders of funds or value; (d) allow a client to purchase or trade in virtual assets unless the licensee has assured itself that the client is aware of the risks of purchasing, holding or trading the virtual asset and has provided disclosures in a form that the client can understand; or (e) provide fiat currency to fiat currency exchange services to users of the trading platform. (3) The licensee shall carry out reasonable due diligence procedures on virtual assets and their issuers that are listed on the platform. (4) A licensee who is operating a virtual asset trading platform shall apply to the Authority, in the prescribed form, for approval prior to engaging in securities investment business which relates to virtual assets. Virtual Asset (Service Providers) Act (2024 Revision) (5) On receipt of an application for approval under subsection (4), the Authority shall determine whether registration or an additional licence is required under the Securities Investment Business Act (2020 Revision) and shall notify the applicant accordingly. (6) In making a determination under subsection (5), the Authority shall assess whether the virtual asset trading platform \u2014 (a) engages in, offers or facilitates securities investment business; (b) lists or facilitates the issuance of securities which are virtual assets in accordance with the Securities Investment Business Act (2020 Revision); and (c) whether any additional supervision is required under the Securities Investment Business Act (2020 Revision). (7) The Authority may grant approval for the application under subsection (4) where it considers that the activity is adequately supervised under this Act and no additional supervision is required under the Securities Investment Business Act (2020 Revision) and may impose additional regulatory requirements specific to the activity carried out by the licensee. (8) A licensee operating a virtual asset trading platform shall comply with the applicable requirements under this section and section 12 and a person who contravenes this provision commits an offence and is liable on conviction to a fine of one hundred thousand dollars.\", \"element\": \"section\", \"heading\": null}, {\"eId\": \"sec_12\", \"num\": \"12.\", \"text\": \"Issuance request 12. (1) Subject to subsection (3), and where permitted under the terms of the respective licence, a licensee who operates a virtual asset trading platform may issue virtual assets on its own behalf directly to the public over the prescribed threshold by submitting a virtual asset issuance request to the Authority and seeking approval from the Authority prior to the issuance. (2) A virtual asset trading platform that is licensed under this Act may issue virtual assets on behalf of a virtual asset service provider directly to the public over the prescribed threshold where \u2014 (a) it is permitted under the terms of its licence; and (b) the virtual asset service provider which is creating the virtual assets for the issuance has obtained approval for the issuance. (3) On approval of an issuance which is over the prescribed threshold, the Authority may impose requirements in relation to \u2014 (a) the method by which the issuer may solicit members of the public to participate in the issuance; Virtual Asset (Service Providers) Act (2024 Revision) (b) the information provided to the public relating to the issuance including the disclosures of material risks associated with the virtual asset, use of funds and terms and conditions of the issuance; (c) the information that the licensee is required to collect from members of the public who participate in the issuance; and (d) the reporting requirements that are specific to the issuance and the intervals by which the information is to be provided to the Authority, and the licensee or any person acting on the licensee\u2019s behalf shall comply with these requirements. (4) A licensee who issues virtual assets directly to the public shall not \u2014 (a) make any false, misleading or deceptive representations or omissions; or (b) engage in fraudulent activity. (5) If a licensee operating a virtual asset trading platform which is facilitating the issuance of newly created virtual assets on behalf of a virtual asset service provider knows, or has reasonable grounds to believe, that the virtual asset issuance does not comply with any applicable requirements, the licensee shall immediately give the Authority written notice of its knowledge or belief, with reasons. (6) A person who contravenes subsection (5) commits an offence and is liable on summary conviction to a fine of twenty thousand dollars. Directions to apply for licence\", \"element\": \"section\", \"heading\": null}, {\"eId\": \"sec_13\", \"num\": \"13.\", \"text\": \"Directions to apply for licence under this Act 13. (1) The Authority may require an existing licensee to apply for a licence under this Act where the existing licensee is engaged in virtual asset service that is determined by the Authority to be an activity that requires a licence under this Act and is materially different from the business activity for which it is licensed under another regulatory law and requires specific supervision under this Act. (2) The licence under this Act shall be in addition to the licence held by the existing licensee under another regulatory law.\", \"element\": \"section\", \"heading\": null}, {\"eId\": \"sec_14\", \"num\": \"14.\", \"text\": \"Directions to apply for a licence under another regulatory law 14. The Authority may require a virtual asset service provider to apply for a licence under any of the other regulatory laws, where the registered person or licensee is carrying on business activity \u2014 (a) that is materially similar to business activity for which there is a licensing regime under the other regulatory laws that provides sufficient oversight and supervision for that business activity and, on approval of the licence under one of the other regulatory laws, the Authority shall cancel the registration or revoke the licence under this Act; or Virtual Asset (Service Providers) Act (2024 Revision) (b) that requires additional oversight that is provided for under a licensing regime under the other regulatory laws and requires that the registered person or licensee apply for the additional licence. Existing licensee\", \"element\": \"section\", \"heading\": null}, {\"eId\": \"sec_15\", \"num\": \"15.\", \"text\": \"Notice by existing licensee 15. (1) An existing licensee who wishes to carry on virtual asset service shall notify the Authority, in the manner specified by the Authority, advising of the nature and scope of the virtual asset service that the existing licensee wishes to carry on. (2) Subject to section 16, the Authority, in reviewing a notice from an existing licensee shall make a determination regarding whether the existing licensee is \u2014 (a) to be granted a waiver for registration or licensing under this Act in accordance with section 16; (b) to apply for a virtual asset service licence; (c) to apply for a sandbox licence; (d) to apply for a licence under one of the other regulatory laws; or (e) to cease providing the virtual asset service. (3) The Authority in reviewing a notice under this section shall take into consideration the matters set out in section 22. (4) An applicant shall provide such information that the Authority considers necessary to make a determination under this section. (5) A notice under this section is not required where an existing licensee is carrying on activities that involve virtual service tokens only. (5A) An existing licensee shall comply with any relevant provisions of this Act as the Authority may require.9 (6) An existing licensee who fails to provide notice under subsection (1) commits an offence and is liable on summary conviction to a fine of one hundred thousand dollars.\", \"element\": \"section\", \"heading\": null}, {\"eId\": \"sec_16\", \"num\": \"16.\", \"text\": \"Waiver 16. (1) Notwithstanding any other provision under this Act, the Authority may waive the requirement for a licence or registration under this Act for an existing licensee where the Authority determines that \u2014 (a) the virtual asset service does not materially change the nature of the activity for which the existing licensee is licensed; and (b) the supervision and oversight carried out in relation to the business of the existing licensee is sufficient to include the virtual asset service. Virtual Asset (Service Providers) Act (2024 Revision) (2) An existing licensee who receives a waiver under this section shall notify the Authority within fifteen days of any change to the information provided in the notice under section 15(1). (3) Notwithstanding the grant of a waiver to an existing licensee, the existing licensee shall comply with any relevant provisions of this Act as the Authority may require. Part 3 \u2013 Sandbox licensees\", \"element\": \"section\", \"heading\": null}, {\"eId\": \"sec_17\", \"num\": \"17.\", \"text\": \"Principles relating to sandbox licences 17. Sandbox licensees shall comply with the sandbox principles of \u2014 (a) honesty; (b) integrity; (c) fair treatment of customers; (d) the protection of customer data and assets; and (e) such other principles as the Authority may prescribe by way of regulations and publish on the Authority\u2019s website.\", \"element\": \"section\", \"heading\": null}, {\"eId\": \"sec_18\", \"num\": \"18.\", \"text\": \"The sandbox licence 18. (1) A sandbox licence is a temporary licence granted for a period of up to one year and shall be subject to review at such time as the Authority may determine is appropriate. (2) The Authority shall assess, monitor and supervise the innovative service, technology or method of delivery of a sandbox licensee with a view to ensuring that \u2014 (a) the service, technology or method of delivery complies with the principles under section 17; (b) the service, technology or method of delivery improves the provision of financial services in the Islands; (c) the service, technology or method of delivery complies with global standards and best practices for combating money laundering, terrorist financing and proliferation financing; (d) the adoption of new financial services practices and technologies within the Islands is facilitated; and (e) best practices and guidance are developed for the virtual asset service sector.\", \"element\": \"section\", \"heading\": null}, {\"eId\": \"sec_19\", \"num\": \"19.\", \"text\": \"Application for a sandbox licence 19. (1) The Authority may require \u2014 Virtual Asset (Service Providers) Act (2024 Revision) (a) a person applying to be registered or a registered person; or (b) a person applying for a virtual asset service licence or a virtual asset service licensee, to apply, instead, for a sandbox licence where the Authority determines that \u2014 (i) the virtual asset service represents an innovative use of technology or uses an innovative method of delivery that requires supervision and oversight that is not offered by a licence or registration under this Act or any other law; (ii) it is in the best interest of the public, existing licensees, licensees, registered persons or the financial markets for the virtual asset service to be temporarily restricted or for specific requirements to be placed temporarily on the provision of the virtual asset service; (iii) the virtual asset service uses or promotes technology or method of delivery that may create systemic risk to the financial markets or otherwise to the jurisdiction; or (iv) the virtual asset service poses a money laundering, terrorism financing or proliferation financing risk that is not properly mitigated by the Anti-Money Laundering Regulations (2023 Revision) or this Act, and the Authority shall cancel the registration or revoke the virtual asset service licence where it has required the person to apply for a sandbox licence. (2) A person under subsection (1) who has been directed by the Authority to apply for a sandbox licence shall do so in the manner specified by the Authority and shall provide such additional information in support of that application as the Authority may specify. (3) A fintech service provider may, but is not required to, apply for a sandbox licence in such manner as may be specified by the Authority. (4) An existing licensee who has provided notice and has been directed by the Authority to apply for a sandbox licence shall do so in the manner specified by the Authority. (5) An applicant for a sandbox licence shall pay the prescribed assessment fee at the time of submission of the application and the application fee as may be specified by the Authority within thirty days of notification of approval for a licence. (6) Where the sandbox application fee remains unpaid within thirty days of notification, the Authority shall cancel its approval of the sandbox licence. (7) An applicant for a sandbox licence shall provide such additional information in support of the application as the Authority may specify. Virtual Asset (Service Providers) Act (2024 Revision) (8) The Authority in reviewing an application under this section shall take into consideration the matters set out in section 22.\", \"element\": \"section\", \"heading\": null}, {\"eId\": \"sec_20\", \"num\": \"20.\", \"text\": \"Compliance with applicable requirements 20. (1) Subject to subsection (2), a sandbox licensee that is a virtual asset service provider shall comply with all requirements applicable to virtual asset service providers in this Act. (2) The Authority, where it grants a sandbox licence, may \u2014 (a) impose any of the requirements that are applicable to a virtual asset service licensee; (b) impose restrictions that the Authority considers necessary to effectively supervise, monitor and assess the virtual asset service or fintech service and such restrictions may relate to \u2014 (i) the technologies or activities that may be provided; (ii) a limit on the number or type of clients to whom the virtual asset service or fintech service may be offered; (iii) a limit on the value or amount of virtual asset service or fintech service offered to clients; (iv) the imposition of reporting requirements at such intervals as the Authority may require; (v) restrictions on the sandbox licensee\u2019s advertising; or (vi) requirements for disclosures to be made to clients; (c) exempt the sandbox licensee from requirements that are applicable to virtual asset service providers or modify any requirement in such manner as the Authority considers appropriate; (d) require that specified technical or operational functions relating to the fintech service or the virtual asset service be maintained in the Islands to facilitate the supervision of the service by the Authority; or (e) require a sandbox licensee who is a virtual asset service provider to comply with the requirement under section 31(1), and every imposition, exemption or modification by the Authority shall be in writing. (3) Where a requirement is imposed or an exemption or a modification is granted under subsection (2), the Authority may impose such conditions that it considers appropriate. (4) The Authority shall not impose a requirement or grant an exemption or modification under subsection (2) unless it is satisfied that it is appropriate to do so. Virtual Asset (Service Providers) Act (2024 Revision) (5) The Authority may remove a requirement, revoke an exemption or vary any modification granted under this section and shall notify the sandbox licensee in writing of its decision and the reason for its decision. (6) Notwithstanding its powers under subsection (2), the Authority may, where it has made a determination, take any action necessary, where the Authority is of the opinion that the action is necessary for the protection of clients or potential clients and in the interest of the public. (7) Before taking any such action under subsection (6), the Authority shall notify the sandbox licensee, in writing, of the actions to be taken and provide its reasons for pursuing such action. (8) A sandbox licensee served with a notice under subsection (7) may, within a period of twenty-eight days from the date of the receipt of the notice, make written representations to the Authority and where such representations are made, the Authority shall take them into account in deciding whether to take the proposed action but the Authority shall not be prevented from taking action before the written representations are made. (9) Where a licensed fintech service provider refers to its licence in any material that is published, distributed or otherwise made available to the public, the fintech service provider is required to state that the licence is a sandbox licence under this Act.\", \"element\": \"section\", \"heading\": null}, {\"eId\": \"sec_21\", \"num\": \"21.\", \"text\": \"Authority may amend, extend or revoke 21. (1) The Authority may \u2014 (a) amend the terms of or the restrictions on the sandbox licence; (b) extend the duration of the sandbox licence; (c) where the Authority determines that \u2014 (i) the sandbox licensee who is a virtual asset service provider has contravened the Anti-Money Laundering Regulations (2023 Revision); or (ii) the virtual asset service provided by a sandbox licensee poses a material risk to the welfare of the public and the stability of the financial services in the Islands, without prior notice, revoke the sandbox licence and require the licensee to cease providing the virtual asset service in or from within the Islands; (d) revoke a sandbox licence and require the virtual asset service provider to apply for registration or a virtual asset service licence under this Act instead; or (e) revoke a sandbox licence and require the virtual asset service provider to apply for a licence under another regulatory law. Virtual Asset (Service Providers) Act (2024 Revision) (2) The Authority may immediately revoke a sandbox licence held by a fintech service provider at any time by providing notice in writing to the sandbox licensee where \u2014 (a) the licensee fails to comply with a requirement relating to its licence; or (b) the Authority, in the performance of its functions under section 18(2), no longer considers the sandbox licence necessary. (3) A fintech service provider who holds a sandbox licence may choose to surrender the licence at any time by providing notice to that effect to the Authority. Part 4 - Decisions to licence, register, approve issuances\", \"element\": \"section\", \"heading\": null}, {\"eId\": \"sec_22\", \"num\": \"22.\", \"text\": \"Decisions by the Authority to licence or register 22. The Authority, in making a decision to grant a virtual asset service licence or a sandbox licence, to register an applicant or to waive a requirement to licence or register under this Act shall consider the following \u2014 (a) the size, scope and complexity of the virtual asset service, underlying technology, method of delivery of the service and virtual asset utilised; (b) the knowledge, expertise and experience of the applicant; (c) the procedures that the applicant has in place to combat money laundering, terrorist financing and proliferation financing; (d) the internal safeguards and data protection systems being utilised by the applicant; (e) the similarity of the virtual asset service to securities investment business as defined under the Securities Investment Business Act (2020 Revision) or to any other regulated activity under any of the other regulatory laws; (f) the risks that the virtual asset service may pose to existing clients, future clients, other licensees or to the financial system of the Islands; (g) whether the virtual asset service business involves the offering of virtual asset custodial services or the operation of a virtual asset trading platform; (h) the net worth, capital reserves and financial stability of the applicant; (i) the impact that the virtual asset service may have on financial services in the Islands; (j) the likelihood that the service will promote innovation, competition and benefits to consumers; (k) except for an applicant that is a fintech service provider, the applicant\u2019s ability to comply with this Act and the relevant requirements of the AntiMoney Laundering Regulations (2023 Revision); Virtual Asset (Service Providers) Act (2024 Revision) (l) the applicant\u2019s senior officers and trustees are fit and proper persons to hold the respective positions; (m) the applicant\u2019s beneficial owners are fit and proper persons to have such ownership or control; and (n) the applicant has paid the assessment fee.\", \"element\": \"section\", \"heading\": null}, {\"eId\": \"sec_23\", \"num\": \"23.\", \"text\": \"Decisions by the Authority to approve issuance of virtual assets 23. (1) In determining whether to approve the issuance of virtual assets pursuant to a request from a licensee or a registered person, the Authority shall consider the following \u2014 (a) the nature of the virtual asset; (b) whether the virtual asset interferes with the functions of the Authority relating to anti-money laundering, combating of terrorist financing and anti-proliferation financing; (c) whether the issuance is harmful to critical or systemically important entities, persons or processes, the local or global financial services markets or the public generally; (d) whether the virtual asset is a security as defined by the Securities Investment Business Act (2020 Revision); (e) the function and purpose of the virtual asset, and if applicable, the nature of any underlying asset which the virtual asset may represent or may be a derivative of; (f) whether the virtual asset service provider wishes to solicit the public directly for the purchase of the virtual assets; (g) the total number of virtual assets that will be issued and available for purchase by the issuance and the amount to be raised in the issuance; (h) the period of time during which the issuance will take place; (i) whether the virtual assets will be issued by way of an obliged virtual asset trading platform or a virtual asset platform which is licensed under this Act; (j) the anti-money laundering processes utilised by or available to the virtual asset issuer; (k) the accuracy and completeness of disclosures to be made to the public regarding the issuance of virtual assets; and (l) any other considerations that the Authority considers relevant. (2) The Authority shall notify the virtual asset issuer who submitted the issuance request of its decision within twenty-one days of receipt of the issuance request. Virtual Asset (Service Providers) Act (2024 Revision) Part 5 \u2013 The Authority: powers and enforcement\", \"element\": \"section\", \"heading\": null}, {\"eId\": \"sec_24\", \"num\": \"24.\", \"text\": \"Powers and duties of the Authority 24. (1) The Authority shall \u2014 (a) maintain a general review of the provision of virtual asset services in the Islands, including taking reasonable measures to identify persons, including natural persons, who are providing these services in contravention of this Act, and submit an annual report of this review to the Cabinet; (b) be responsible for supervision and enforcement in respect of virtual asset service licensees, sandbox licensees and registered persons to whom this Act applies and for the investigation of persons where the Authority reasonably believes that they have contravened the licence or registration provisions in this Act; (c) whenever the Authority considers it necessary, examine, the affairs or business of any virtual asset service provider by way of the receipt of regular returns, on-site inspections, auditor\u2019s reports or in such other manner as the Authority may determine, for the purpose of \u2014 (i) assessing whether a virtual asset service provider is undertaking its authorised activities in accordance with this Act; (ii) confirming that the Anti-Money Laundering Regulations (2023 Revision) are being complied with; (iii) confirming that a licensee is in a sound financial position; (iv) assessing whether a licensee\u2019s cybersecurity safeguard measures are sufficient to protect client information and assets; or (v) carrying out any other functions of the Authority; (d) ensure that fintech and virtual asset services are offered in a manner that accords with the public interest and is conducive to the growth of the financial services industry; and (e) monitor regulatory requirements and the supervisory needs of virtual asset service providers and make recommendations to the Ministry regarding changes to the regulatory laws with a view to ensuring that the regulatory laws provide an effective framework for the supervision of virtual asset services and regulated activities that include the use of virtual assets. (2) The Authority may, in writing, authorise any other person to assist it to carry out its functions under this Act. (3) A person who knowingly or recklessly provides any information to the Authority which is false or misleading in a material respect commits an offence and is liable on summary conviction to a fine of ten thousand dollars and to imprisonment for six months. Virtual Asset (Service Providers) Act (2024 Revision) (4) The Authority may, by Order, provide for the listing of newly created virtual assets.\", \"element\": \"section\", \"heading\": null}, {\"eId\": \"sec_25\", \"num\": \"25.\", \"text\": \"Enforcement powers of the Authority 25. (1) Without prejudice to any other action that may be instituted or taken against a virtual asset service provider, if at any time it appears to the Authority that a virtual asset service provider has failed to comply with any of the requirements under this Act, the Authority may, by written notice, direct the virtual asset service provider to comply with the requirement within such period of time and on such terms and conditions as the Authority may specify and the virtual asset service provider shall comply with the notice. (2) The Authority may take any of the steps listed in subsection (3) if it knows, or has reasonable grounds to believe, that a virtual asset service provider \u2014 (a) is, or appears likely to become, unable to meet its obligations as they fall due; (b) is carrying on business fraudulently or otherwise in a manner detrimental to the public interest, to the interest of its clients or to the interest of its creditors; (c) has contravened any provision of this Act, or of any regulations made hereunder, or of the Anti-Money Laundering Regulations (2023 Revision); (d) has failed to comply with a condition of the respective licence or registration; (e) has not conducted the direction and management of its business in a fit and proper manner; (f) has senior officers, trustees or persons who have acquired ownership or control who are not fit and proper persons; (g) is a \u201ccorporate services provider\u201d, as defined in Part XVIIA of the Companies Act (2023 Revision), Part 12 of the Limited Liability Companies Act (2023 Revision) or Part 8 of the Limited Liability Partnership Act (2023 Revision), and has contravened that Part; or (h) has failed to comply with a lawful direction from the Authority. (3) The Authority may \u2014 (a) revoke the virtual asset service licence or a sandbox licence or cancel the registration; (b) impose conditions or further conditions upon the licence or amend or revoke any such conditions; (c) apply to the court for any order which is necessary to protect the interests of clients or creditors of the licensee or registered person; Virtual Asset (Service Providers) Act (2024 Revision) (d) publish in the Gazette and in any official publications of the Authority, a contravention by any person of this Act, of any regulations made hereunder or of any lawful direction issued by the Authority; (e) at the expense of the virtual asset service provider, require the licensee or registered person to obtain an auditor\u2019s report on the licensee\u2019s anti-money laundering systems and procedures for compliance with the Anti-Money Laundering Regulations (2023 Revision); (f) require the substitution of any senior officer or trustee of the virtual asset service provider whenever appointed, or the divestment of ownership or control; (g) in the case of a reasonable belief that the virtual asset service provider has contravened the Anti-Money Laundering Regulations (2023 Revision), report the same to the Director of Public Prosecutions; (h) require such action to be taken by the virtual asset service provider as the Authority reasonably believes necessary for the purposes of dealing with the circumstances referred to in paragraphs (a) to (g); (i) in the case of a virtual asset service provider who is also regulated or supervised for virtual asset services in another jurisdiction, notify the relevant regulator or government entity in the respective jurisdictions of the failure to comply with the directive of the Authority; (j) at the expense of the licensee, appoint a person to advise the licensee on the proper conduct of its affairs and to report to the Authority thereon; or (k) at the expense of the licensee, appoint a person who shall be known as the Authority\u2019s appointed controller, to assume control of the licensee\u2019s affairs who shall, subject to necessary modifications, have all the powers of a person appointed as a receiver or manager of a business appointed under section 18 of the Bankruptcy Act (1997 Revision). (4) Where the Authority decides to take action under subsections (3)(a) to (3)(i), it shall notify the virtual asset service provider in writing, specifying the following \u2014 (a) the action that the Authority has taken or intends to take; (b) the reasons for the action, with reference to statutory provisions, and when it is to take effect; (c) whether, in addition to the rights under paragraph (d), the virtual asset service provider may make representations to the Authority within such period as may be specified in the notification; and (d) the licensee\u2019s right to appeal under section 30 and the procedure therefor. (5) A person appointed under subsection (3)(j) or (3)(k) or whose appointment has been extended under subsection (6)(b) shall, from time to time at the person\u2019s discretion and in any case within three months of the date of the appointment or Virtual Asset (Service Providers) Act (2024 Revision) of the extension of the appointment, prepare and furnish to the Authority a report of the affairs of the licensee and of the recommendations thereon. (6) On receipt of a report under subsection (5), the Authority may \u2014 (a) revoke the appointment of the person appointed under subsection (3)(j) or (3)(k); (b) extend the period of the appointment; (c) subject to such conditions as the Authority may impose, allow the licensee or registered person to reorganise its affairs in a manner approved by the Authority; or (d) revoke the licence and apply to the court for an order that the licensee, if the licensee is a company, be wound up by the court in which case the provisions of the Companies Act (2023 Revision) relating to the winding up of a company shall apply. (7) Notwithstanding any other provision in this Act, the Authority may revoke a virtual asset service licence, a sandbox licence or cancel the registration if the licensee or registered person has ceased, or wishes to cease, carrying on virtual asset service, or has not commenced business within one year of the date of the grant of the licence or the registration. (8) Whenever the Authority revokes a licence or cancels a registration under this section, notice of such revocation or cancellation shall be published forthwith in the Gazette.\", \"element\": \"section\", \"heading\": null}, {\"eId\": \"sec_26\", \"num\": \"26.\", \"text\": \"Direction to cease and desist 26. (1) Where the Authority is of the opinion that a virtual asset service provider is \u2014 (a) carrying out, or about to carry out, an act that is an unsafe or an unsound practice in conducting the business of the virtual asset service provider; or (b) pursuing, or about to pursue, a course of conduct that is an unsafe or an unsound practice in the conduct of the business of the virtual asset service provider, the Authority may direct the virtual asset service provider, in relation to the virtual asset service, to cease or refrain from carrying out the act or pursuing the course of conduct and to carry out such acts as are necessary, in the opinion of the Authority, to remedy or ameliorate its conduct. (2) A person who, without reasonable cause, fails to comply with a direction given by the Authority under subsection (1), commits an offence and is liable \u2014 (a) on summary conviction, to a fine of fifty thousand dollars or to imprisonment for one year, or to both; or (b) on conviction on indictment, to a fine of one hundred thousand dollars or to imprisonment for five years or to both, Virtual Asset (Service Providers) Act (2024 Revision) and if the offence continues after conviction, the person shall be liable to a fine of ten thousand dollars for every day on which the offence continues. (3) If the Authority knows, or has reasonable grounds to believe, that any of the acts referred to in section 25(2)(b) through (g) have occurred in relation to a virtual asset service provider, the virtual asset service provider commits a breach and may be liable to an administrative fine by virtue of Part VIA of the Monetary Authority Act (2020 Revision).\", \"element\": \"section\", \"heading\": null}, {\"eId\": \"sec_27\", \"num\": \"27.\", \"text\": \"Revocation of licence 27. (1) The Authority may revoke a virtual asset service licence or a sandbox licence where it is of the opinion that \u2014 (a) the licensee has failed to comply with an obligation imposed on it by this Act; (b) the licensee is carrying on business in a manner that is not permitted by the licence; (c) the Authority has been provided with false, misleading or inaccurate information by or on behalf of the licensee or a person who is a senior officer or trustee of the licensee; (d) the interests of the clients or potential clients of the licensee are threatened; or (e) the licensee has contravened the Anti-Money Laundering Regulations (2023 Revision). (2) Where the Authority revokes a virtual asset service licence under subsection (1), it shall publish a notice to that effect forthwith in the Gazette.\", \"element\": \"section\", \"heading\": null}, {\"eId\": \"sec_28\", \"num\": \"28.\", \"text\": \"Shares not to be issued or transferred without the prior approval of the Authority 28. (1) No shares totalling ten per cent or more of the total shares in a company which is a virtual asset service provider under this Act shall be issued, and no issued shares or interests shall be voluntarily transferred or disposed of, without the prior approval of the Authority. (2) For the avoidance of doubt, where the virtual asset service provider is a partnership, a partnership interest is equivalent to shares in a company. (3) For the purposes of subsections (1) and (2), a virtual asset service provider shall provide such information to the Authority, and within the specific time, as the Authority may require for the purpose of assessing whether persons acquiring control or ownership of such shares or partnership interest, as the case may be, referred to in that subsection are fit and proper persons to have such control or ownership. Virtual Asset (Service Providers) Act (2024 Revision) (4) For the avoidance of doubt, references to shares representing ten per cent or more of the total voting rights or ownership of a legal person include the cumulative acquisition of shares, voting rights which amount to ten per cent or more of the total voting rights of the legal person or legal arrangement and a reference to shares being transferred or disposed of includes the transfer or disposal of the legal or the beneficial interest in the shares or interests. (5) In the event of shares in a company or the interests in a partnership which is a virtual asset service provider vesting involuntarily or through process of law in a person, the company or partnership, as soon as it becomes aware of such vesting, shall inform the Authority of the number of shares or interests and the identity of the person in whom the shares or interests have vested; and the company or partnership and the person in whom they have vested shall comply with any instructions as to the licence or registration or the business of the company or partnership as may be given by the Authority. (6) The Authority shall not grant the approval specified in subsection (1) where the shareholder or partner of a virtual asset service provider is not a fit and proper person. (7) The Authority may exempt from the provisions of subsection (1) a virtual asset service provider with ninety-five per cent or more of their shares publicly traded on a stock exchange recognised by the Authority, and any such exemption \u2014 (a) shall be subject to the condition that the virtual asset service provider shall, as soon as reasonably practicable, notify the Authority of \u2014 (i) any change in control of the virtual asset service provider; (ii) the acquisition by any person or group of persons of shares representing more than ten per cent of the virtual asset service provider\u2019s issued share capital or total voting rights; or (iii) the acquisition by any person or group of persons of shares representing more than ten per cent of the issued share capital or total voting rights of the virtual asset service provider\u2019s parent company; (b) shall be subject to a condition that the virtual asset service provider shall, as soon as reasonably practicable, provide such information to the Authority, within such period of time as the Authority may require, for the purpose of enabling an assessment as to whether persons acquiring control or ownership of the virtual asset service provider, in the circumstances set out in paragraph (a), are fit and proper persons to have such control or ownership; and (c) shall be subject to such terms and other conditions as the Authority considers necessary. (8) A person who contravenes this section commits an offence and is liable on summary conviction to a fine of twenty thousand dollars. Virtual Asset (Service Providers) Act (2024 Revision)\", \"element\": \"section\", \"heading\": null}, {\"eId\": \"sec_29\", \"num\": \"29.\", \"text\": \"Guidance 29. (1) The Authority may, after consultation with the Minister and such persons as the Authority considers representative of the virtual asset service sector, issue guidance notes for the purpose of giving practical guidance with respect to this Act. (2) The Authority shall publish in the Gazette any guidance notes and such notice shall indicate the date on which the guidance notes come into effect. (3) In determining whether a person has complied with any of the requirements under this Act \u2014 (a) a court shall take into account any relevant guidance notes issued under subsection (1) which apply to that person; and (b) a court may take into account any other relevant guidance issued by a body that regulates, or is representative of, any trade, profession, business or employment carried on by that person. Appeals\", \"element\": \"section\", \"heading\": null}, {\"eId\": \"sec_30\", \"num\": \"30.\", \"text\": \"Appeals against decisions made by the Authority 30. (1) An appeal lies to the court from a decision of the Authority \u2014 (a) for the refusal to grant a licence or registration; (b) revocation of a licence; (c) cancellation of registration; (d) to take enforcement action under section 25; (e) for refusal of an application for virtual asset issuance; and (f) for refusal of an application of an existing licensee to engage in virtual asset service. (2) An appeal against the decision of the Authority shall be by way of motion. (3) The appellant shall, within twenty-one days after the day on which the Authority has given its decision, serve a notice of motion signed by the appellant or the appellant\u2019s attorney-at-law on the Authority of the intention to appeal and of the general ground of the appeal. (4) A person who is aggrieved by a decision of the Authority may, upon notice to the Authority, apply to the court for leave to extend the time within which the notice of appeal prescribed by this section may be served and the court, upon the hearing of such application, may extend the time prescribed by this section as it considers fit. (5) The Authority shall, upon receiving the notice of appeal, transmit to the Clerk of the court without delay a copy of the decision and all papers relating to the Virtual Asset (Service Providers) Act (2024 Revision) appeal, but the Authority is not compelled to disclose any information if it is considered that the public interest would suffer by such disclosure. (6) At the hearing of the appeal the appellant shall, before going into the case, state all the grounds of appeal on which the appellant intends to rely and shall not, unless by leave of the court go into any matters not raised by such statements. (7) The court may adjourn the hearing of an appeal and may, upon the hearing thereof confirm, reverse, vary or modify the decision of the Authority or remit the matter with the opinion of the court thereon to the Authority. (8) An appeal against a decision of the Authority under this section shall not have the effect of suspending the execution of the decision.\", \"element\": \"section\", \"heading\": null}, {\"eId\": \"sec_31\", \"num\": \"31.\", \"text\": \"Audit of accounts 31. (1) A virtual asset service licensee shall have its accounts audited annually or at such times as the Authority may require by an auditor approved by the Authority who shall be a member of \u2014 (a) the Institute of Chartered Accountants in England and Wales; (b) the Canadian Institute of Chartered Accountants; (c) the Chartered Association of Certified Accountants; (d) the American Institute of Certified Public Accountants; or (e) such other accounting professional body or institute approved by the Authority. (2) Within six months of the end of a licensee\u2019s financial year, the licensee shall forward to the Authority the audited accounts for the financial year just ended. (3) Any licensee who fails to comply with subsection (2) within the stated period or any extension to the period granted by the Authority for good cause shown, is liable to a late filing fee of fifty dollars for each day or part thereof that the licensee fails to comply. (4) The Authority may exempt a virtual asset service licensee from the audit requirement under subsection (1) if the Authority determines the requirement to be unnecessary or prohibitive given \u2014 (a) the size, scope and complexity of the economic activity; and (b) the availability of auditing services for the virtual asset service. (5) When a licensee who is required to provide audited accounts to the Authority changes its auditor, the Authority may require the former auditor to explain in writing the circumstances giving rise to the change. (6) If it appears to the Authority that an auditor has failed to comply with the requirements in section 32(1), the Authority may disqualify the auditor from being an auditor of a licensee but the Authority may remove any disqualification Virtual Asset (Service Providers) Act (2024 Revision) imposed under this subsection if it is satisfied that the person in question will in future comply with the requirements. (7) A licensee shall not appoint as an auditor a person disqualified under subsection (6).\", \"element\": \"section\", \"heading\": null}, {\"eId\": \"sec_32\", \"num\": \"32.\", \"text\": \"Duty of auditor 32. (1) If an auditor, in the course of carrying out an audit or producing a report under section 9 becomes aware of or has reasonable grounds to believe that the licensee or registered person \u2014 (a) is or is likely to become unable to meet its obligations as they fall due; (b) carrying on or attempting to carry on business otherwise than in compliance with \u2014 (i) this Act or any regulations made hereunder; (ii) Part XVIIA of the Companies Act (2023 Revision), Part 12 of the Limited Liability Companies Act (2023 Revision) and Part 8 of the Limited Liability Partnership Act (2023 Revision), if the licensee is a \u201ccorporate services provider\u201d as defined in that Part; (iii) the Anti-Money Laundering Regulations (2023 Revision); or (iv) a condition of the licence or registration; (c) is carrying on or attempting to carry on business in a manner that is prejudicial to its clients or is winding up its business voluntarily in a manner that is prejudicial to its clients or creditors; or (d) is carrying on or attempting to carry on business without maintaining any or sufficient accounting records or record keeping systems to enable the auditor to carry out an audit or produce a report, the auditor shall immediately give the Authority and the licensee written notice of the knowledge or belief and giving reasons therefor. (2) An auditor who contravenes subsection (1) is liable to removal by the Authority from its list of approved auditors. (3) A reference in this section to an auditor carrying out an audit or preparing a report on a licensee or registered person includes an auditor who was engaged to carry out such an audit or prepare such a report or who was in the course of so doing but resigned before completion or whose contract to carry out same was otherwise terminated. (4) No duty to which an auditor of a licensee or registered person may be subject shall be regarded as being contravened by reason of the auditor communicating in good faith to the Authority any information or opinion on a matter specified in subsection (1) or providing any information or opinion in response to a request made by the Authority pursuant to a power conferred by this Act. Virtual Asset (Service Providers) Act (2024 Revision) (5) An auditor shall not be liable in damages for anything done or omitted to be done in the discharge or proposed discharge of the auditor\u2019s functions under this Act in relation to the preparation of a report or in relation to any notice given under subsection (1) unless it is shown that the act or omission was in bad faith.\", \"element\": \"section\", \"heading\": null}, {\"eId\": \"sec_33\", \"num\": \"33.\", \"text\": \"Entry and search of premises 33. (1) If the court, on sworn information on oath, is satisfied that the conditions in subsection (2) are fulfilled and either \u2014 (a) that admission to the premises has been refused, or that a refusal is expected, and that reasonable notice of the intention to apply for the warrant has been given to the occupier; (b) that an application for admission, or the giving of such a notice, would defeat the object of the entry; or (c) that the case is one of urgency, or that the premises are unoccupied or that the occupier is temporarily absent, the court may, by warrant signed by a judge, authorise a constable of the rank of inspector or above to enter the premises, if need be, by reasonable force. (2) The conditions referred to in subsection (1) are that there are reasonable grounds for suspecting that \u2014 (a) there is or has been, on the premises to which entry is sought, any contravention of this Act or the Proceeds of Crime Act (2024 Revision); or (b) there is on those premises evidence of any contravention of this Act or \u2014 (i) the Proceeds of Crime Act (2024 Revision); (ii) Part XVIIA of the Companies Act (2023 Revision); (iii) Part 12 of the Limited Liability Companies Act (2023 Revision); or (iv) Part 8 of the Limited Liability Partnership Act (2023 Revision). (3) Every warrant granted under this section shall continue in force for a period of one month. (4) A constable entering any premises by virtue of this section may be accompanied by such employees of, or advisers to, the Authority as may be necessary to ensure the successful execution of the warrant. (5) The constable authorised by any such warrant to search any premises may, if so authorised by the warrant, search every person who is found in those premises and may seize any documents, computer hardware or mobile devices found in the possession of any such person or in such premises which the constable has reasonable ground for believing ought to have been produced pursuant to a lawful request from the Authority. (6) A person who wilfully obstructs a constable in the exercise of any powers conferred on the constable by this section commits an offence and is liable on Virtual Asset (Service Providers) Act (2024 Revision) summary conviction to a fine of one hundred thousand dollars and to imprisonment for five years. (7) The Rules Committee of the Grand Court may make rules for the purposes of this section.\", \"element\": \"section\", \"heading\": null}, {\"eId\": \"sec_34\", \"num\": \"34.\", \"text\": \"Winding up 34. (1) The Authority may apply to the court for a licensee or a registered person, or a former licensee or registered person, that is or has been in contravention of section 4(1) to be wound up by the court, notwithstanding any winding up of the company voluntarily. (2) On an application under subsection (1), the court may make an order for the licensee or registered person to be wound up by the court if the court is of the opinion that the winding up would be in the public interest in all the circumstances of the case. Part 6 \u2013 General\", \"element\": \"section\", \"heading\": null}, {\"eId\": \"sec_35\", \"num\": \"35.\", \"text\": \"Offence to carry on business without licence, registration or waiver 35. (1) A person who carries on, or purports to carry on, virtual asset service in or from within the Islands for which registration is required who is not a registered person or the holder of a waiver under this Act, commits an offence and is liable on summary conviction to a fine of twenty-five thousand dollars and to imprisonment for one year. (2) Where the offence under subsection (1) continues after conviction, the person shall be liable to a fine of ten thousand dollars for each day during which the offence continues. (3) A person who carries on, or purports to carry on \u2014 (a) virtual asset custody services; or (b) operate a virtual asset trading platform, in or from within the Islands who is not a licensee or is not a person who is in receipt of a waiver under this Act, commits an offence and is liable on summary conviction to a fine of one hundred thousand dollars and to imprisonment for one year and in the case of a continuing offence, to a fine of ten thousand dollars for each day during which the offence continues. Virtual Asset (Service Providers) Act (2024 Revision)\", \"element\": \"section\", \"heading\": null}, {\"eId\": \"sec_36\", \"num\": \"36.\", \"text\": \"Offences by corporations, partnerships, limited liability partnerships, etc.10 36. (1) Where an offence is committed by a body corporate and it is proved to have been committed with the consent or connivance of, or to be attributable to any neglect on the part of any senior officer of the body corporate, or any person who was purporting to act in any such capacity, that person as well as the body corporate commits that offence and is liable to be proceeded against and punished accordingly. (2) Where the affairs of a body corporate are managed by its members, subsection (1) shall apply in relation to the acts and defaults of a member in connection with the member\u2019s functions of management as if the member were a senior officer of the body corporate. (3)11  Where an offence under this Act is committed by a partnership, a limited liability partnership or an exempted limited partnership and it is proved that the offence \u2014 (a)  was committed with the consent or connivance of; or (b)  is attributable to any neglect on the part of, a partner concerned in the management or control of a partnership or a limited liability partnership, or a partner who takes part in the conduct of the business of an exempted limited partnership, that partner, as well as the partnership, the limited liability partnership or the exempted limited partnership, as applicable, commits the offence and is liable to be proceeded against and punished accordingly. (4)12  Where an offence under this Act is committed by an unincorporated association other than a partnership, a limited liability partnership or an exempted limited partnership and it is proved that the offence \u2014 (a)  was committed with the consent or connivance of; or (b)  is attributable to neglect on the part of, a person concerned in the management or control of the unincorporated association, that person, as well as the unincorporated association, commits the offence and is liable to be proceeded against and punished accordingly.\", \"element\": \"section\", \"heading\": null}, {\"eId\": \"sec_37\", \"num\": \"37.\", \"text\": \"Offences for which there is no penalty 37. A person who contravenes any provision of this Act for which no penalty is specifically provided commits an offence and is liable on summary conviction to a fine of four thousand dollars.\", \"element\": \"section\", \"heading\": null}, {\"eId\": \"sec_38\", \"num\": \"38.\", \"text\": \"Fitness and propriety 38. In determining whether a person is a fit and proper person, regard shall be had to all circumstances including that person\u2019s \u2014 (a) honesty, integrity and reputation; Virtual Asset (Service Providers) Act (2024 Revision) (b) competence and capability; and (c) financial soundness.\", \"element\": \"section\", \"heading\": null}, {\"eId\": \"sec_39\", \"num\": \"39.\", \"text\": \"Regulations 39. (1) The Cabinet may, after consultation with the Authority, make regulations \u2014 (a) prescribing anything which is to be prescribed under this Act; and (b) generally for carrying the purposes and provisions of this Act into effect. (2) Without prejudice to the generality of the foregoing, such regulations may in respect of registered persons, virtual asset service licensees or sandbox licensees \u2014 (a) specify standards for the form and content of any advertising or promotion of virtual asset service; (b) require a registered person, a virtual asset service licensee or a sandbox licensee to make full and proper disclosure to clients of the capacity in which the registered person or licensee is acting in relation to a particular virtual asset services transaction and whether the transaction is being effected for the registered person\u2019s or the licensee\u2019s own account or that of any person other than the client; (c) specify standards for dealings with clients and clients\u2019 assets, including the holding upon trust of clients\u2019 assets by the registered person, virtual asset service licensee or sandbox licensee; (d) establish financial requirements and specify standards for financial conduct and record keeping and reporting; (e) specify disclosure requirements in respect of the amount, value or arrangements for the payment or provision, of commissions or other inducements; (f) specify arrangements for the settlement of disputes; and (g) specify the nature and extent of any insurance arrangements required of the registered person, virtual asset service licensee or sandbox licensee. (3) Regulations made under this Act may provide that the contravention of a provision constitutes an offence and may prescribe penalties for any such offence not exceeding the maximum fine and term of imprisonment for any offence under this Act. (4)  Regulations made under this Act may provide for such savings, transitional and consequential provisions to have effect in connection with the coming into operation of any provision of this Act as are necessary or expedient. (5)  Regulations made under subsection (4) may be given retrospective operation to a date that is not earlier than 31st October, 2020. (6)  Regulations which are given retrospective operation shall not \u2014 Virtual Asset (Service Providers) Act (2024 Revision) (a)  affect in a prejudicial manner, rights existing before the date on which those regulations come into force; or (b)  impose liabilities in respect of anything done or omitted to be done before the date on which those regulations come into force\", \"element\": \"section\", \"heading\": null}, {\"eId\": \"sec_40\", \"num\": \"40.\", \"text\": \"Indemnity 40. Neither the Cabinet, nor a director or officer of the Authority nor any person authorised in writing by the Authority to assist it in undertaking any of its functions under this Act or appointed pursuant to section 25 shall be liable in damages for anything done or omitted to be done in the discharge or purported discharge of their functions under this Act, unless it is shown that the act or omission was in bad faith.\", \"element\": \"section\", \"heading\": null}, {\"eId\": \"sec_41\", \"num\": \"41.\", \"text\": \"Regulatory law 41. This Act is a regulatory law for the purposes of the Monetary Authority Act (2020 Revision). Publication in consolidated and revised form authorised by the Cabinet this 30th day of January, 2024. Kim Bullings Clerk of the Cabinet Virtual Asset (Service Providers) Act (2024 Revision) ENDNOTES ENDNOTES Table of Legislation history: SL # Law\/Act # Legislation Commencement Gazette 7\/2023 Virtual Asset (Service Providers) (Amendment) Act, 2023 26-May-2023 LG16\/2023\/s7 Virtual Asset (Service Providers) Act (2022 Revision) 31-Jan-2022 LG7\/2022\/s6 1\/2021 Virtual Asset (Service Providers) (Amendment) Act, 2020 (Commencement) Order, 2021 11-Jan-2021 LG3\/2021\/s3 59\/2020 Virtual Asset (Service Providers) (Amendment) Act, 2020 15-Jan-2021 LG1\/2021\/s3 56\/2020 Citation of Acts of Parliament Act, 2020 3-Dec-2020 LG89\/2020\/s1 35\/2020 Civil Partnership Law, 2020 4-Sep-2020 LG64\/2020\/s1 137\/2020 Virtual Asset (Service Providers) Law, 2020 (Commencement) Order, 2020 28-Oct-2020 LG80\/2020\/s5 14\/2020 Virtual Asset (Service Providers) Law, 2020 31-Jan-2021 LG40\/2020\/s1 Table of endnote references: 1 S.2 amended by s.2 of Act 7 of 2023. 2 S.2 amended by s.2 of Act 7 of 2023. 3 S.2 amended by s.2 of Act 59 of 2020. 4 S.2 amended by s.2 of Act 7 of 2023. 5 S.7(1) amended by s.3 of Act 59 of 2020. 6 S.7(1A) inserted by s.3 of Act 59 of 2020. 7 S.7(3) amended by s.3 of Act 59 of 2020. 8 S.9(6) amended by s.4 of Act 59 of 2020. 9 S.15(5A) inserted by s.5 of Act 59 of 2020. 10 S.36 amended by s.3 of Act 7 of 2023. 11 S.36 amended by s.3 of Act 7 of 2023. 12 S.36 amended by s.3 of Act 7 of 2023. ENDNOTES (Price: $8.80)\", \"element\": \"section\", \"heading\": null}], \"meta\": {\"notes\": null, \"workflow\": null, \"lifecycle\": {\"source\": \"#cilegis\", \"eventRef\": [{\"eId\": \"e_commence_2024_02_15\", \"date\": \"2024-02-15\", \"type\": \"generation\", \"source\": \"#cilegis\"}]}, \"references\": {\"source\": \"#canary\", \"TLCRole\": [], \"TLCEvent\": [{\"eId\": \"ev_commencement\", \"href\": \"\/akn\/ontology\/canary\/event\/commencement\", \"showAs\": \"commencement\"}], \"TLCPerson\": [], \"TLCConcept\": [{\"eId\": \"inForce\", \"href\": \"\/akn\/ontology\/canary\/concept\/temporal\/in-force\", \"showAs\": \"in force\"}], \"TLCProcess\": [], \"TLCLocation\": [], \"TLCOrganization\": [{\"eId\": \"cilegis\", \"href\": \"\/akn\/ontology\/canary\/organization\/editor\/cilegis\", \"showAs\": \"Cayman Islands legislation mirror (kyleg)\"}]}, \"temporalData\": {\"source\": \"#cilegis\", \"temporalGroup\": [{\"eId\": \"tg_inforce_2024_02_15\", \"timeInterval\": [{\"end\": null, \"start\": \"#e_commence_2024_02_15\", \"duration\": null, \"refersTo\": \"#inForce\"}]}]}, \"classification\": null, \"identification\": {\"source\": \"#cilegis\", \"FRBRWork\": {\"FRBRuri\": \"\/akn\/ky\/act\/2020\/14\", \"FRBRdate\": [{\"date\": \"2024-02-15\", \"name\": \"generation\"}], \"FRBRthis\": \"\/akn\/ky\/act\/2020\/14\/!main\", \"FRBRalias\": [{\"name\": \"cmsId\", \"value\": \"2020-0014\"}], \"FRBRauthor\": [{\"as\": \"#editor\", \"href\": \"\/akn\/ontology\/canary\/organization\/editor\/cilegis\"}], \"FRBRnumber\": \"14 of 2020\", \"FRBRcountry\": \"ky\", \"FRBRsubtype\": \"principal\"}, \"FRBRExpression\": {\"FRBRuri\": \"\/akn\/ky\/act\/2020\/14\/eng@2024-02-15\", \"FRBRdate\": [{\"date\": \"2024-02-15\", \"name\": \"generation\"}], \"FRBRthis\": \"\/akn\/ky\/act\/2020\/14\/eng@2024-02-15\/!main\", \"FRBRauthor\": [{\"as\": \"#editor\", \"href\": \"\/akn\/ontology\/canary\/organization\/editor\/cilegis\"}], \"FRBRlanguage\": \"eng\"}, \"FRBRManifestation\": {\"FRBRuri\": \"\/akn\/ky\/act\/2020\/14\/eng@2024-02-15.xml\", \"FRBRdate\": [{\"date\": \"2026-06-22\", \"name\": \"generation\"}], \"FRBRthis\": \"\/akn\/ky\/act\/2020\/14\/eng@2024-02-15.xml\", \"FRBRauthor\": [{\"as\": \"#editor\", \"href\": \"\/akn\/ontology\/canary\/organization\/editor\/cilegis\"}], \"FRBRformat\": \"application\/xml\"}}}, \"name\": \"act\", \"header\": {\"title\": \"Virtual Asset (Service Providers) Act\", \"actNumber\": \"14 of 2020\", \"longTitle\": null}}, \"doc\": null, \"bill\": null, \"judgment\": null}}","akn_full_text":"CAYMAN ISLANDS\n\nVIRTUAL ASSET (SERVICE PROVIDERS)\nACT\n(2024 Revision)\n\nSupplement No. 6 published with Legislation Gazette No. 9 of 15th February, 2024.\n\u2000\n\nPage 2\nRevised as at 31st December, 2023\nc\n\nPUBLISHING DETAILS\n\nLaw 14 of 2020 consolidated with Acts 59 of 2020, 7 of 2023 and as amended by Act 56\nof 2020.\n\nRevised under the authority of the Law Revision Act (2020 Revision).\n\nOriginally enacted \u2014\nLaw 14 of 2020-20th May, 2020\nLaw 35 of 2020-4th September, 2020 (date of assent)\nAct 56 of 2020-7th December, 2020\nAct 59 of 2020-16th December, 2020\nAct 7 of 2023-28th April, 2023.\n\nConsolidated and revised this 31st day of December, 2023.\n\nNote (not forming part of this Act):  This revision replaces the 2022 Revision which\nshould now be discarded.Sponsoring Ministry\/Portfolio: Ministry of Financial Services\nand Home Affairs (FSHA)\n\nVirtual Asset (Service Providers) Act (2024 Revision)\nArrangement of Sections\n\nc\nRevised as at 31st December, 2023\nPage 3\n\nCAYMAN ISLANDS\n\nVIRTUAL ASSET (SERVICE PROVIDERS) ACT\n(2024 Revision)\nArrangement of Sections\nSection\nPage\nPART 1 - Preliminary\n1.\nShort title and commencement ..................................................................................................5\n2.\nInterpretation .............................................................................................................................5\n3.\nMeaning of \u201cvirtual asset service provider\u201d .................................................................................8\n4.\nRegistration or licence required .................................................................................................9\n5.\nFees ........................................................................................................................................ 10\nPart 2 \u2013 Registered persons and virtual asset service\nlicensees\nRegistration\n11\n6.\nApplication for registration ....................................................................................................... 11\n7.\nRegistered person: virtual asset issuance ................................................................................ 12\nVirtual asset service licence\n12\n8.\nApplication for virtual asset service licence .............................................................................. 12\n9.\nGeneral requirements for virtual asset service providers .......................................................... 14\n10.\nRequirements: virtual asset custody services ........................................................................... 16\n11.\nRequirements: virtual asset trading platforms .......................................................................... 17\n12.\nIssuance request ..................................................................................................................... 19\nDirections to apply for licence\n20\n13.\nDirections to apply for licence under this Act ............................................................................ 20\n14.\nDirections to apply for a licence under another regulatory law .................................................. 20\nExisting licensee\n21\n15.\nNotice by existing licensee ....................................................................................................... 21\n\nArrangement of Sections\nVirtual Asset (Service Providers) Act (2024 Revision)\n\nPage 4\nRevised as at 31st December, 2023\nc\n\n16.\nWaiver ..................................................................................................................................... 21\nPart 3 \u2013 Sandbox licensees\n17.\nPrinciples relating to sandbox licences .................................................................................... 22\n18.\nThe sandbox licence ................................................................................................................ 22\n19.\nApplication for a sandbox licence ............................................................................................. 22\n20.\nCompliance with applicable requirements ................................................................................ 24\n21.\nAuthority may amend, extend or revoke ................................................................................... 25\nPart 4 - Decisions to licence, register, approve issuances\n22.\nDecisions by the Authority to licence or register ....................................................................... 26\n23.\nDecisions by the Authority to approve issuance of virtual assets .............................................. 27\nPart 5 \u2013 The Authority: powers and enforcement\n24.\nPowers and duties of the Authority........................................................................................... 28\n25.\nEnforcement powers of the Authority ....................................................................................... 29\n26.\nDirection to cease and desist ................................................................................................... 31\n27.\nRevocation of licence ............................................................................................................... 32\n28.\nShares not to be issued or transferred without the prior approval of the Authority .................... 32\n29.\nGuidance ................................................................................................................................. 34\nAppeals\n34\n30.\nAppeals against decisions made by the Authority .................................................................... 34\n31.\nAudit of accounts ..................................................................................................................... 35\n32.\nDuty of auditor ......................................................................................................................... 36\n33.\nEntry and search of premises .................................................................................................. 37\n34.\nWinding up .............................................................................................................................. 38\nPart 6 \u2013 General\n35.\nOffence to carry on business without licence, registration or waiver ......................................... 38\n36.\nOffences by corporations, partnerships, limited liability partnerships, etc. ................................ 39\n37.\nOffences for which there is no penalty ..................................................................................... 39\n38.\nFitness and propriety ............................................................................................................... 39\n39.\nRegulations ............................................................................................................................. 40\n40.\nIndemnity ................................................................................................................................. 41\n41.\nRegulatory law ......................................................................................................................... 41\nENDNOTES\n43\nTable of Legislation history: ............................................................................................................... 43\nTable of endnote references: ............................................................................................................. 43\n\nVirtual Asset (Service Providers) Act (2024 Revision)\nSection 1\n\nc\nRevised as at 31st December, 2023\nPage 5\n\nCAYMAN ISLANDS\n\nVIRTUAL ASSET (SERVICE PROVIDERS) ACT\n(2024 Revision)\n\nPART 1 - Preliminary\n1.\nShort title and commencement\n1.\nThis Act may be cited as the Virtual Asset (Service Providers) Act (2024 Revision)\nand came into operation in accordance with the Virtual Asset (Service Providers)\nLaw, 2020 (Commencement) Order, 2020 [SL 137 of 2020] and the Virtual Asset\n(Service Providers) (Amendment) Act, 2020 (Commencement) Order, 2021 [SL 1 of\n2021]. Provisions not specified therein shall come into force on such date as the\nCabinet may by Order specify.\n2.\nInterpretation\n2.\n(1) In this Act \u2014\n\u201capplication fee\u201d means the fee that is payable by an applicant for registration\nor licensing under section 5(3);\n\u201cassessment fee\u201d means the fee that is submitted with an application for\nregistration or a licence to the Authority under section 5(1);\n\u201cAuthority\u201d means the Cayman Islands Monetary Authority established under\nsection 5(1) of the Monetary Authority Act (2020 Revision) or such other\nauthority as the Cabinet may by order appoint;\n\u201cbeneficial owner\u201d has the same meaning as in regulation 2 of the Anti-Money\nLaundering Regulations (2023 Revision);\n\nSection 2\nVirtual Asset (Service Providers) Act (2024 Revision)\n\nPage 6\nRevised as at 31st December, 2023\nc\n\n\u201cbeneficiary\u201d, in relation to a transfer of virtual asset, means the natural or legal\nperson or the legal arrangement that will own the virtual asset on completion of\na transfer;\n\u201ccompetent authority\u201d has the same meaning as in section 2 of the Proceeds\nof Crime Act (2024 Revision);\n\u201cexempted limited partnership\u201d has the meaning assigned by section 2 of the\nExempted Limited Partnership Act (2021 Revision);1\n\u201cexisting licensee\u201d means a person that is licensed under any of the other\nregulatory laws and is not a virtual asset service licensee or a sandbox licensee\nunder this Act;\n\u201cfiat currency\u201d means currency that is issued by the relevant body in a country\nor by a government that is designated as legal tender in its country of issuance\nthrough, among other things, government decree or law;\n\u201cFinancial Action Task Force\u201d means the task force established by the Group\nof Seven to develop and promote national and international policies to combat\nmoney laundering and terrorist financing;\n\u201cfintech service\u201d means a service that uses innovative technology to improve,\nchange or enhance financial services but is not a virtual asset service;\n\u201cfintech service provider\u201d means a person who is carrying on fintech service\nin or from within the Islands but does not provide virtual asset service;\n\u201cissuance request\u201d means a request submitted to the Authority prior to a virtual\nasset issuance and containing such information as may be specified by the\nAuthority;\n\u201cissuance of virtual assets\u201d or \u201cvirtual asset issuance\u201d means the sale of\nnewly created virtual assets to the public in or from within the Islands in\nexchange for fiat currency, other virtual assets or other consideration but does\nnot include the sale of virtual service tokens;\n\u201climited liability partnership\u201d means a limited liability partnership registered\nunder section 18(4) or 33(4) of the Limited Liability Partnership Act (2023\nRevision);2\n\u201cnewly created virtual assets\u201d means virtual assets which have never been\nsold, offered or distributed to the public;\n\u201cnon high-risk jurisdiction\u201d means any jurisdiction that \u2014\n(a)\nis not on the list of high risk jurisdictions subject to a call for action issued\nby the Financial Action Task Force; or\n(b) is not designated by the Cabinet as a jurisdiction which has serious\ndeficiencies in its compliance with recognised international standards for\ncombating money laundering and the financing of terrorism,\nunder the Proceeds of Crime Act (2024 Revision);\n\nVirtual Asset (Service Providers) Act (2024 Revision)\nSection 2\n\nc\nRevised as at 31st December, 2023\nPage 7\n\n\u201cobliged entity\u201d means a financial institution, person or group of persons that\nprovides a virtual asset service that is licensed or registered and is supervised\nfor virtual asset services by a government regulatory body in another non-highrisk jurisdiction;3\n\u201coperator\u201d, in relation to a virtual asset trading platform, means a person or\ngroup of persons that exerts effective control over the activities of a virtual asset\ntrading platform however, in the absence of a single entity or group that exerts\neffective control over the platform, the operator shall be considered to be the\nowner of the entity under which the platform operates;\n\u201coriginator\u201d, in relation to a transfer of virtual asset, means \u2014\n(a)\nthe natural person, legal person or legal arrangement that places an order\nwith the virtual asset service provider for the virtual asset transfer; or\n(b) where the transfer is carried out by a virtual asset service provider on behalf\nof a client or other third party, the client or third party who owned the\nvirtual asset immediately before the transfer;\n\u201cpartnership\u201d has the meaning assigned by section 3 of the Partnership Act\n(2024 Revision);4\n\u201cregistered person\u201d means a person registered in accordance with section 6;\n\u201cregulatory laws\u201d has the same meaning as in section 2 of the Monetary\nAuthority Act (2020 Revision);\n\u201csandbox licence\u201d means a licence that is granted in accordance with Part 3 of\nthis Act;\n\u201csecurities investment business\u201d has the same meaning as in section 2 of the\nSecurities Investment Business Act (2020 Revision);\n\u201csenior officer\u201d means a director, managing director, president, chief executive\nofficer, partner, managing partner, general partner, ultimate partner, manager or\nsomeone who has a similar control function;\n\u201cthreshold\u201d, in relation to a virtual asset issuance, means a prescribed amount\nin fiat currency or equivalent that can be raised by the public issuance of virtual\nassets within a given timeframe by the virtual asset issuer;\n\u201ctransfer of virtual asset\u201d means any transaction carried out on behalf of an\noriginator with a view to making the virtual asset available to a beneficiary;\n\u201cvirtual asset\u201d means a digital representation of value that can be digitally\ntraded or transferred and can be used for payment or investment purposes but\ndoes not include a digital representation of fiat currencies;\n\u201cvirtual asset custodian\u201d means a licensee who provides virtual asset custody\nservices in or from within the Islands;\n\nSection 3\nVirtual Asset (Service Providers) Act (2024 Revision)\n\nPage 8\nRevised as at 31st December, 2023\nc\n\n\u201cvirtual asset custody service\u201d means the business of safekeeping or\nadministration of virtual assets or the instruments that enable the holder to\nexercise control over virtual assets;\n\u201cvirtual asset service\u201d means the issuance of virtual assets or the business of\nproviding one or more of the following services or operations for or on behalf\nof a natural or legal person or legal arrangement \u2014\n(a) exchange between virtual assets and fiat currencies;\n(b) exchange between one or more other forms of convertible virtual assets;\n(c) transfer of virtual assets;\n(d) virtual asset custody service; or\n(e)\nparticipation in, and provision of, financial services related to a virtual\nasset issuance or the sale of a virtual asset;\n\u201cvirtual asset service licence\u201d means a licence granted under section 8;\n\u201cvirtual asset service provider\u201d has the meaning set out in section 3; and\n\u201cvirtual service token\u201d means a digital representation of value which is not\ntransferrable or exchangeable with a third party at any time and includes digital\ntokens whose sole function is to provide access to an application or service or\nto provide a service or function directly to its owner.\n(2) For the purposes of this Act, \u201cvirtual asset trading platform\u201d means a\ncentralised or decentralised digital platform \u2014\n(a)\nwhich facilitates the exchange of virtual assets for fiat currency or other\nvirtual assets on behalf of third parties for a fee, commission, spread or\nother benefit; and\n(b) which \u2014\n(i)\nholds custody of or controls virtual assets on behalf of its clients to\nfacilitate an exchange; or\n(ii) purchases virtual assets from a seller when transactions or bids and\noffers are matched in order to sell them to a buyer,\nand includes its owner or operator, but does not include a platform that only\nprovides a forum where sellers and buyers may post bids and offers and a forum\nwhere the parties trade in a separate platform or in a peer-to-peer manner.\n(3) For the purpose of the definition of \u201cvirtual asset trading platform\u201d, where a\nsingle entity or group that controls the platform cannot be identified, the\noperator of the platform shall be deemed the owner of the entity under which\nthe platform operates.\n3.\nMeaning of \u201cvirtual asset service provider\u201d\n3.\n(1) For the purposes of this Act, a person is a virtual asset service provider if the\nperson is \u2014\n\nVirtual Asset (Service Providers) Act (2024 Revision)\nSection 4\n\nc\nRevised as at 31st December, 2023\nPage 9\n\n(a)\na company incorporated under the Companies Act (2023 Revision);\n(b) a general partnership established under the Partnership Act (2024\nRevision);\n(c)\na limited partnership registered under the Partnership Act (2024 Revision);\n(d) an exempted limited partnership registered under the Exempted Limited\nPartnership Act (2021 Revision);\n(e)\na foreign company registered under Part IX of the Companies Act (2023\nRevision);\n(f)\na limited liability company formed and registered under the Limited\nLiability Companies Act (2023 Revision); or\n(g) a limited liability partnership formed and registered under the Limited\nLiability Partnership Act (2023 Revision),\n\nand provides virtual asset service as a business or in the course of business in or\nfrom within the Islands and is registered or licensed in accordance with this Act\nor is an existing licensee that is granted a waiver by the Authority under section\n16.\n(2) For the purposes of this Act, virtual service tokens are not virtual assets and a\nperson or legal arrangement that provides services that involve virtual service\ntokens only are not required to have a licence or registration under this Act.\n4.\nRegistration or licence required\n4.\n(1) Subject to subsections (2) and (3), a person shall not carry on, or purport to carry\non, virtual asset service in or from within the Islands unless that person \u2014\n(a)\nis a registered person;\n(b) in the case of the provision of virtual asset custodial services or the\noperation of a virtual asset trading platform, holds a virtual asset service\nlicence;\n(c)\nis an existing licensee that has been granted a waiver from the Authority\nunder section 16; or\n(d) holds a sandbox licence,\nin accordance with this Act.\n(2) A natural person shall not carry on, or purport to carry on, in or from within the\nIslands virtual asset service as a business or in the course of business.\n(3) For the purposes of subsections (1) and (2), a person purports to carry on virtual\nasset service where the person \u2014\n(a)\nuses one or more words that connote virtual asset service either in English\nor in any other language, in the description or title under which the person\ncarries on business;\n\nSection 5\nVirtual Asset (Service Providers) Act (2024 Revision)\n\nPage 10\nRevised as at 31st December, 2023\nc\n\n(b) makes a representation in a document or makes a representation in any\nother manner that the person is carrying on virtual asset service; or\n(c)\notherwise holds out as carrying on virtual asset service.\n(4) A contract, transaction, obligation or instrument entered into by any person shall\nnot be rendered unenforceable because it was entered into in connection with\nvirtual asset service carried on by that person in contravention of subsection (1)\nor (2).\n5.\nFees\n5.\n(1) An application for registration or a licence shall be accompanied by the\nprescribed non-refundable assessment fee under subsection (3).\n(2) On the Authority\u2019s decision to approve an application for registration or a\nlicence, the Authority shall notify the applicant of its approval and the applicant\nshall pay the application fee as may be specified by the Authority.\n(3) The application fee shall be such amount that is payable by an applicant for\nregistration or licensing after assessment and approval of the application by the\nAuthority, such fee being within the prescribed range and determined by the\nAuthority based on, but not limited to, the nature, size, scope and complexity of\nthe virtual asset service or fintech service set out in the application less the\nassessment fee.\n(4) The application fee shall be paid by the applicant no later than thirty days after\nbeing notified of the fee by the Authority and where the fee is not paid the\napproval shall be cancelled by the Authority.\n(5) A licensee or a registered person shall, on or before 15th January in each year,\npay the prescribed renewal fee and there shall be payable by a licensee or\nregistered person who fails to pay the renewal fee by that date a surcharge of\none-twelfth of that fee for every month, or part of a month, after 15th January\nin each year that the fee is not paid.\n(6) The licence or registration in respect of which the renewal fee remains unpaid\nfor three full months after 15th January in any year shall lapse immediately but\nif, within a period of one month after the date of lapse, the person who held the\nlicence or registration prior to its lapse pays \u2014\n(a)\nthe prescribed renewal fee;\n(b) the surcharges due under subsection (5); and\n(c)\nan administration fee of ten per cent of the renewal fee,\nthe licence or registration may be renewed for the period from 1st January to\n31st December, inclusive, of the year in question.\n(7) The Authority may, for good cause, waive any additional fee imposed under\nsubsection (5).\n\nVirtual Asset (Service Providers) Act (2024 Revision)\nSection 6\n\nc\nRevised as at 31st December, 2023\nPage 11\n\n(8) If the prescribed renewal fee referred to in subsection (5) is not paid on or before\nthe 15th day of January in each year, the unpaid annual fee may be sued for by\nthe Crown by action as a civil debt and the Crown may require, and the court\nmay order, the payment of any penalties accrued in respect of the late payment\nof the fee.\nPart 2 \u2013 Registered persons and virtual asset service licensees\nRegistration\n6.\nApplication for registration\n6.\n(1) Subject to subsection (3), a person, not being an existing licensee, who \u2014\n(a)\nat the commencement of this Act is carrying on virtual asset service for\nwhich a licence is not required under this Act; or\n(b) wishes to carry on virtual asset service for which a licence is not required\nunder this Act,\nshall apply in the prescribed form to be a registered person under this Act and\nsubmit the application along with the prescribed assessment fee to the Authority.\n(2) The Authority in determining whether to approve the application from a person\nin subsection (1), shall consider \u2014\n(a)\nthe matters set out in section 22; and\n(b) whether \u2014\n(i)\nthe applicant should apply instead for a virtual asset service licence\nor a sandbox licence as the virtual asset service is one for which a\nlicence is required; or\n(ii) the applicant should apply instead for registration or a licence under\none of the other regulatory laws as the virtual asset service is similar\nin nature to an activity or service for which registration or a licence\nis required under another regulatory law and for which supervision\nunder this Act is not required.\n(3) The Authority shall, further to its determination under subsection (2) that the\napplicant is suitable to be registered, register the applicant upon payment of the\napplication fee or reject the application for registration if the applicant is found\nto be unsuitable.\n(4) Where an application for registration has not been approved, the Authority shall\nnotify the applicant of its decision and the reasons therefor.\n(5) An applicant for registration or a registered person shall notify the Authority\nwithin fifteen days of any changes to the information provided under subsection\n(1) that occurs after submission of the application.\n\nSection 7\nVirtual Asset (Service Providers) Act (2024 Revision)\n\nPage 12\nRevised as at 31st December, 2023\nc\n\n(6) If a registered person engages in activities for which a licence is required under\nthis Act, the Authority shall cancel the registration and require the registered\nperson to apply for a licence.\n(7) A registered person shall not publicly state, imply or convey that it is licensed\nor regulated in the Islands.\n(8) An application under this section shall include such information as may be\nprescribed and any information that the Authority requires in order to make a\ndetermination.\n(9) A person who contravenes subsection (5) commits an offence and is liable on\nsummary conviction to a fine of twenty thousand dollars.\n7.\nRegistered person: virtual asset issuance\n7.\n(1) A registered person shall not issue virtual assets directly to members of the\npublic in excess of the prescribed threshold.5\n(1A) A registered person shall, prior to issuing virtual assets, submit an issuance\nrequest to the Authority in the prescribed form and obtain the approval of the\nAuthority prior to the issuance.6\n\n (2) Where a virtual asset issuance is within the prescribed threshold and involves\nthe transfer or exchange of virtual assets or fiat currency, a registered person\nshall maintain records containing such information as may be specified by the\nAuthority for every transaction of the issuance involving the public and the\nregistered person shall make the records available to the Authority when\nrequested.\n(3) Notwithstanding subsections (1), (1A) and (2), a registered person may, in\naccordance with subsection (4), engage one or more virtual asset trading\nplatforms that are obliged entities or licensed under this Act for the issuance of\nnewly created virtual assets over the prescribed threshold and the virtual assets\nshall be issued by way of these virtual asset trading platforms.7\n(4) A registered person under subsection (3) shall, prior to engaging an obliged or\nlicensed virtual asset trading platform for the issuance of newly created virtual\nassets, submit a virtual asset issuance request to the Authority in the prescribed\nform and obtain the approval of the Authority.\nVirtual asset service licence\n8.\nApplication for virtual asset service licence\n8.\n(1) A person who \u2014\n(a)\nwishes to provide virtual asset custody services or wishes to operate a\nvirtual asset trading platform;\n(b) at the commencement of this Act is providing or operating any of the\nservices referred to in paragraph (a);\n\nVirtual Asset (Service Providers) Act (2024 Revision)\nSection 8\n\nc\nRevised as at 31st December, 2023\nPage 13\n\n(c)\nis an existing licensee under this Act and has been directed by the\nAuthority to obtain a virtual asset service licence; or\n(d) is providing virtual asset service and has been directed by the Authority to\nobtain a virtual asset service licence,\nmay apply for a virtual asset service licence in the prescribed form.\n(2) The Authority shall, in relation to an application received under subsection (1),\neither \u2014\n(a)\ngrant a virtual asset service licence;\n(b) direct the applicant to apply for a sandbox licence in accordance with\nsection 19(1);\n(c)\ndirect the applicant to apply for a licence under one of the other regulatory\nlaws where the virtual asset service is similar in nature to a service for\nwhich registration or a licence is required under another regulatory law\nand for which supervision under this Act is not required; or\n(d) refuse the application to grant the licence.\n(3) An application under this section shall include such information as may be\nprescribed and any additional information as may be specified by the Authority\nthat enables it to make a determination and the application shall be accompanied\nby the prescribed assessment fee.\n(4) The Authority in determining whether to approve the application from a person\nin subsection (1), shall consider the matters set out in section 22 and whether \u2014\n(a)\nan approval of the application is against the public interest;\n(b) the applicant has \u2014\n(i)\npersonnel with the necessary skills, knowledge and experience;\n(ii) facilities, books, records and accounting systems;\n(iii) adequate capital and cybersecurity measures,\nas the Authority considers appropriate having regard to the size, scope and\ncomplexity of the business; and\n(c)\nthe applicant has complied with such other requirements under this Act for\nwhich the Authority requests the applicant\u2019s compliance,\nand where the Authority is satisfied, it shall notify the applicant of its approval\nof the application and the application fee under section 5(3).\n(5) On payment of the application fee, the Authority shall grant the licence to the\napplicant and the licence shall set out the specific service under subsection (1)\nthat the licensee is permitted to carry on.\n(6) Where the Authority has granted a licence under this section, it shall, as soon as\nreasonably possible after the grant, publish notification of such grant in the\nGazette.\n\nSection 9\nVirtual Asset (Service Providers) Act (2024 Revision)\n\nPage 14\nRevised as at 31st December, 2023\nc\n\n(7) Where an application for a licence has not been approved, the Authority shall\nnotify the applicant of its decision and the reasons therefor.\n(8) The Authority may impose \u2014\n(a)\nregulatory requirements on a virtual asset service licensee as the Authority\nconsiders necessary based on \u2014\n(i)\nits assessment of the virtual asset service provided by the licensee;\n(ii) the nature of the supervision required for the virtual asset service;\n(iii) the safety and soundness of the method by which the virtual asset\nservice is offered to the public; or\n(iv) where applicable, any licence held under another regulatory law; and\n(b) further restrictions or prohibitions on the use of technology or practices\nthat, in the opinion of the Authority, may disrupt or prejudice \u2014\n(i)\nthe functions of the Authority;\n(ii) the interests of the public; or\n(iii) the financial services in the Islands.\n(9) The Authority shall maintain a current register of licensees setting out the\nbusiness address of the licensee and details of the activities that the licensee is\npermitted to carry on and such other information as may be prescribed.\n(10) A licensee or an applicant for a licence shall notify the Authority within fifteen\ndays of any changes to the information provided under subsection (3) that occurs\nafter submission of the application.\n9.\nGeneral requirements for virtual asset service providers\n9.\n(1) The Authority may, at the virtual asset service provider\u2019s expense, require a\nvirtual asset service provider to provide an auditor\u2019s report, prepared by an\nindependent auditor, on the anti-money laundering systems and procedures for\ncompliance with the Anti-Money Laundering Regulations (2023 Revision).\n(2) A virtual asset service provider shall prepare accounts annually and make the\naccounts available for inspection upon request by the Authority at the registered\noffice at such reasonable time as the Authority may specify.\n(3) A virtual asset service provider shall \u2014\n(a)\nensure that \u2014\n(i)\nits senior officers and trustees are fit and proper persons to hold the\nrespective positions; and\n(ii) its beneficial owners are fit and proper persons to have such control\nor ownership;\n(b) take such steps as may be necessary to protect and secure the personal data\nand virtual assets of its clients;\n\nVirtual Asset (Service Providers) Act (2024 Revision)\nSection\n\nc\nRevised as at 31st December, 2023\nPage 15\n\n(c)\nensure that all communications relating to the virtual asset service are\naccurate;\n(d) comply with the Anti-Money Laundering Regulations (2023 Revision) and\nother laws relating to the combating of money laundering, terrorist\nfinancing and proliferation financing;\n(e)\nfor the purpose of ensuring compliance with the Anti-Money Laundering\nRegulations (2023 Revision), put in place anti-money laundering systems\nand procedures; and\n(f)\ndesignate an employee as the officer with responsibility for the procedures\nfor combating money laundering, terrorist financing and proliferation\nfinancing.\n(4) A virtual asset service provider shall \u2014\n(a)\nhave a registered office in the Islands;\n(b) provide documents, statements or such other information that may be\nrequired by the Authority to enable it to properly perform any of its\nfunctions under this Act;\n(c)\nnotify the Authority of \u2014\n(i)\nany licence or registration in another jurisdiction;\n(ii) the opening of an office or establishing a physical presence in another\njurisdiction;\n(iii) any penalties that are imposed or enforcement actions taken against\nit in another jurisdiction; or\n(iv) the holding of, or the acquisition of, a controlling interest in another\nperson or legal arrangement engaged in virtual asset service; and\n(d) provide such other information as may be specified by the Authority.\n(5) When performing a transfer of virtual assets, a virtual asset service provider\nshall collect and maintain information on the beneficiary and originator of the\ntransfer in accordance with the Anti-Money Laundering Regulations (2023\nRevision) and any additional information specified by the Authority, for all\ntransfers performed and comply with any other requirements outlined therein\nand the records shall \u2014\n(a)\nbe made available, at the request of the Authority or any competent\nauthority, through its registered office; and\n(b) where a request for information is made under paragraph (a), be provided\nwithin forty-eight hours of receipt of the request.\n(6) A virtual asset service provider shall not engage in securities investment\nbusiness unless the person is registered or is a licensee under the Securities\nInvestment Business Act (2020 Revision) or has been exempted from registration\n\nSection 10\nVirtual Asset (Service Providers) Act (2024 Revision)\n\nPage 16\nRevised as at 31st December, 2023\nc\n\nor licensing by the Authority under the Securities Investment Business Act (2020\nRevision).8\n(7) The Authority may impose additional requirements specific to a virtual asset\nservice on a virtual asset service provider to ensure compliance with the AntiMoney Laundering Regulations (2023 Revision).\n(8) A virtual asset service provider shall not appoint \u2014\n(a)\na senior officer or trustee; or\n(b) an anti-money laundering compliance officer,\nwithout the prior approval of the Authority.\n(9) The Authority shall not grant the approval specified in subsection (8) where a\nsenior officer, trustee or anti-money laundering compliance officer is not a fit\nand proper person.\n(10) For the purposes of this section, \u201caccounts\u201d include unaudited reports.\n(11) A person who contravenes subsections (1) and (8) commits an offence and is\nliable on summary conviction to a fine of twenty thousand dollars.\n10.\nRequirements: virtual asset custody services\n10. (1) The Authority may, where necessary, impose requirements on a licensee that\nprovides virtual asset custody services including \u2014\n(a)\nnet worth requirements;\n(b) reporting requirements;\n(c)\ndisclosures to clients concerning the transparency of operations including\nthe risks associated with the custodial arrangements, internal safeguards,\nthe methods of access to virtual assets held and insurance arrangements;\n(d) requirements for the safekeeping of client assets, including the segregation\nof assets, insurance requirements and cybersecurity measures; and\n(e)\nany other requirement the Authority determines is in the best interest of\nthe beneficial owners of the assets held by the licensee.\n(2) A virtual asset custodian shall not, unless specifically agreed to by the beneficial\nowners of the virtual assets \u2014\n(a)\nencumber; or\n(b) have encumbered by a third party,\nvirtual asset deposits held on behalf of clients.\n(3) A virtual asset service licensee that is providing virtual asset custody services\nshall \u2014\n(a)\nenter into a custodial arrangement with the owner of a virtual asset listing\nat a minimum \u2014\n\nVirtual Asset (Service Providers) Act (2024 Revision)\nSection 11\n\nc\nRevised as at 31st December, 2023\nPage 17\n\n(i)\nthe manner in which the virtual assets are to be held;\n(ii) the transactions that the custodian is permitted to engage in and the\nmanner in which the transactions are to be conducted;\n(iii) disclosures relating to the risks present in the safekeeping of the\nvirtual assets and any mitigating factors;\n(iv) fees, spreads or other remuneration to the custodian;\n(v) the manner in which the client may access the virtual assets and how\nthe custodial arrangement may be terminated;\n(vi) information related to the licensee\u2019s security safeguards;\n(vii) remedies available to the owner upon the unforeseeable loss of the\nvirtual assets by the custodian; and\n(vii) any other information specified by the Authority;\n(b) maintain information technology best practices relating to virtual assets\nheld in custody;\n(c) ensure that all ancillary or subsidiary proceeds relating to virtual assets\nheld in custody shall accrue to the benefit of the owner of the virtual asset\nunless otherwise agreed to with the owner in writing;\n(d) take such steps as may be necessary to safeguard the virtual assets held on\nbehalf of third parties; and\n(e)\nhave adequate safeguards against theft and loss.\n(4) A licensee providing virtual asset custody services shall comply with applicable\nrequirements under this section and a person who contravenes this provision\ncommits an offence and is liable on conviction to a fine of one hundred thousand\ndollars.\n11.\nRequirements: virtual asset trading platforms\n11. (1) The Authority may, where necessary, impose requirements on a licensee that\noperates a virtual asset trading platform including \u2014\n(a)\nthe nature of the access of users to the platform;\n(b) the type of client that it may market its services to;\n(c)\nthe types of virtual assets that may, or may not, be traded on the virtual\nasset trading platform;\n(d) requirements for the listing of virtual assets;\n(e)\nnet worth and reporting requirements;\n(f)\nidentification and management of conflicts of interest and price discovery\nmechanisms to prevent price manipulation and other unfair trading\npractices;\n\nSection 11\nVirtual Asset (Service Providers) Act (2024 Revision)\n\nPage 18\nRevised as at 31st December, 2023\nc\n\n(g) disclosures to clients concerning the transparency of operations of the\nvirtual asset trading platform including disclosures to clients on custodial\narrangements and insurance against theft or loss of assets;\n(h) the monitoring and supervision of trading activity that is taking place on\nthe virtual asset trading platform and the freezing and suspension of\ntrading of virtual assets;\n(i)\nthe technology used in the operation of the trading platform including\ninformation on the resiliency of the platform and cybersecurity safeguards\nin place;\n(j)\nthe clearing and settlement process for transactions between buyers and\nsellers of virtual assets;\n(k) the provision of financing for the purchase of virtual assets;\n(l)\ncontrols to mitigate against money laundering, terrorist financing and\nproliferation financing; and\n(m) any other requirement that the Authority considers to be in the best interest\nof the users of the virtual asset trading platform.\n(2) A licensee that operates a virtual asset trading platform shall not \u2014\n(a)\nprovide financing to its clients for the purchase of virtual assets unless\ndisclosures are made to clients regarding the terms of, and the risk of, the\nfinancing;\n(b) engage in trading or market making behaviour for its own account which\ncould be detrimental to the interests of its clients unless these activities are\nnecessary for the operation of the virtual asset trading platform and these\nactivities have been disclosed to the clients of the platform;\n(c)\nallow a virtual asset to be traded on its platform unless it has assured itself\nthat the virtual asset is not presented in a deceiving manner or in a manner\nthat is meant to defraud holders of funds or value;\n(d) allow a client to purchase or trade in virtual assets unless the licensee has\nassured itself that the client is aware of the risks of purchasing, holding or\ntrading the virtual asset and has provided disclosures in a form that the\nclient can understand; or\n(e)\nprovide fiat currency to fiat currency exchange services to users of the\ntrading platform.\n(3) The licensee shall carry out reasonable due diligence procedures on virtual\nassets and their issuers that are listed on the platform.\n(4) A licensee who is operating a virtual asset trading platform shall apply to the\nAuthority, in the prescribed form, for approval prior to engaging in securities\ninvestment business which relates to virtual assets.\n\nVirtual Asset (Service Providers) Act (2024 Revision)\nSection 12\n\nc\nRevised as at 31st December, 2023\nPage 19\n\n(5) On receipt of an application for approval under subsection (4), the Authority\nshall determine whether registration or an additional licence is required under\nthe Securities Investment Business Act (2020 Revision) and shall notify the\napplicant accordingly.\n(6) In making a determination under subsection (5), the Authority shall assess\nwhether the virtual asset trading platform \u2014\n(a)\nengages in, offers or facilitates securities investment business;\n(b) lists or facilitates the issuance of securities which are virtual assets in\naccordance with the Securities Investment Business Act (2020 Revision);\nand\n(c)\nwhether any additional supervision is required under the Securities\nInvestment Business Act (2020 Revision).\n(7) The Authority may grant approval for the application under subsection (4)\nwhere it considers that the activity is adequately supervised under this Act and\nno additional supervision is required under the Securities Investment Business\nAct (2020 Revision) and may impose additional regulatory requirements specific\nto the activity carried out by the licensee.\n(8) A licensee operating a virtual asset trading platform shall comply with the\napplicable requirements under this section and section 12 and a person who\ncontravenes this provision commits an offence and is liable on conviction to a\nfine of one hundred thousand dollars.\n12.\nIssuance request\n12. (1) Subject to subsection (3), and where permitted under the terms of the respective\nlicence, a licensee who operates a virtual asset trading platform may issue virtual\nassets on its own behalf directly to the public over the prescribed threshold by\nsubmitting a virtual asset issuance request to the Authority and seeking approval\nfrom the Authority prior to the issuance.\n(2) A virtual asset trading platform that is licensed under this Act may issue virtual\nassets on behalf of a virtual asset service provider directly to the public over the\nprescribed threshold where \u2014\n(a)\nit is permitted under the terms of its licence; and\n(b) the virtual asset service provider which is creating the virtual assets for the\nissuance has obtained approval for the issuance.\n(3) On approval of an issuance which is over the prescribed threshold, the Authority\nmay impose requirements in relation to \u2014\n(a)\nthe method by which the issuer may solicit members of the public to\nparticipate in the issuance;\n\nSection 13\nVirtual Asset (Service Providers) Act (2024 Revision)\n\nPage 20\nRevised as at 31st December, 2023\nc\n\n(b) the information provided to the public relating to the issuance including\nthe disclosures of material risks associated with the virtual asset, use of\nfunds and terms and conditions of the issuance;\n(c)\nthe information that the licensee is required to collect from members of the\npublic who participate in the issuance; and\n(d) the reporting requirements that are specific to the issuance and the intervals\nby which the information is to be provided to the Authority,\nand the licensee or any person acting on the licensee\u2019s behalf shall comply with\nthese requirements.\n(4) A licensee who issues virtual assets directly to the public shall not \u2014\n(a)\nmake any false, misleading or deceptive representations or omissions; or\n(b) engage in fraudulent activity.\n(5) If a licensee operating a virtual asset trading platform which is facilitating the\nissuance of newly created virtual assets on behalf of a virtual asset service\nprovider knows, or has reasonable grounds to believe, that the virtual asset\nissuance does not comply with any applicable requirements, the licensee shall\nimmediately give the Authority written notice of its knowledge or belief, with\nreasons.\n(6) A person who contravenes subsection (5) commits an offence and is liable on\nsummary conviction to a fine of twenty thousand dollars.\nDirections to apply for licence\n13.\nDirections to apply for licence under this Act\n13. (1) The Authority may require an existing licensee to apply for a licence under this\nAct where the existing licensee is engaged in virtual asset service that is\ndetermined by the Authority to be an activity that requires a licence under this\nAct and is materially different from the business activity for which it is licensed\nunder another regulatory law and requires specific supervision under this Act.\n(2) The licence under this Act shall be in addition to the licence held by the existing\nlicensee under another regulatory law.\n14.\nDirections to apply for a licence under another regulatory law\n14. The Authority may require a virtual asset service provider to apply for a licence under\nany of the other regulatory laws, where the registered person or licensee is carrying\non business activity \u2014\n(a)\nthat is materially similar to business activity for which there is a licensing\nregime under the other regulatory laws that provides sufficient oversight\nand supervision for that business activity and, on approval of the licence\nunder one of the other regulatory laws, the Authority shall cancel the\nregistration or revoke the licence under this Act; or\n\nVirtual Asset (Service Providers) Act (2024 Revision)\nSection 15\n\nc\nRevised as at 31st December, 2023\nPage 21\n\n(b) that requires additional oversight that is provided for under a licensing\nregime under the other regulatory laws and requires that the registered\nperson or licensee apply for the additional licence.\nExisting licensee\n15.\nNotice by existing licensee\n15. (1) An existing licensee who wishes to carry on virtual asset service shall notify the\nAuthority, in the manner specified by the Authority, advising of the nature and\nscope of the virtual asset service that the existing licensee wishes to carry on.\n(2) Subject to section 16, the Authority, in reviewing a notice from an existing\nlicensee shall make a determination regarding whether the existing licensee\nis \u2014\n(a)\nto be granted a waiver for registration or licensing under this Act in\naccordance with section 16;\n(b) to apply for a virtual asset service licence;\n(c)\nto apply for a sandbox licence;\n(d) to apply for a licence under one of the other regulatory laws; or\n(e)\nto cease providing the virtual asset service.\n(3) The Authority in reviewing a notice under this section shall take into\nconsideration the matters set out in section 22.\n(4) An applicant shall provide such information that the Authority considers\nnecessary to make a determination under this section.\n(5) A notice under this section is not required where an existing licensee is carrying\non activities that involve virtual service tokens only.\n(5A) An existing licensee shall comply with any relevant provisions of this Act as the\nAuthority may require.9\n(6) An existing licensee who fails to provide notice under subsection (1) commits\nan offence and is liable on summary conviction to a fine of one hundred\nthousand dollars.\n16.\nWaiver\n16. (1) Notwithstanding any other provision under this Act, the Authority may waive\nthe requirement for a licence or registration under this Act for an existing\nlicensee where the Authority determines that \u2014\n(a)\nthe virtual asset service does not materially change the nature of the\nactivity for which the existing licensee is licensed; and\n(b) the supervision and oversight carried out in relation to the business of the\nexisting licensee is sufficient to include the virtual asset service.\n\nSection 17\nVirtual Asset (Service Providers) Act (2024 Revision)\n\nPage 22\nRevised as at 31st December, 2023\nc\n\n(2) An existing licensee who receives a waiver under this section shall notify the\nAuthority within fifteen days of any change to the information provided in the\nnotice under section 15(1).\n(3) Notwithstanding the grant of a waiver to an existing licensee, the existing\nlicensee shall comply with any relevant provisions of this Act as the Authority\nmay require.\nPart 3 \u2013 Sandbox licensees\n17.\nPrinciples relating to sandbox licences\n17. Sandbox licensees shall comply with the sandbox principles of \u2014\n(a)\nhonesty;\n(b) integrity;\n(c)\nfair treatment of customers;\n(d) the protection of customer data and assets; and\n(e)\nsuch other principles as the Authority may prescribe by way of regulations\nand publish on the Authority\u2019s website.\n18.\nThe sandbox licence\n18. (1) A sandbox licence is a temporary licence granted for a period of up to one year\nand shall be subject to review at such time as the Authority may determine is\nappropriate.\n(2) The Authority shall assess, monitor and supervise the innovative service,\ntechnology or method of delivery of a sandbox licensee with a view to ensuring\nthat \u2014\n(a)\nthe service, technology or method of delivery complies with the principles\nunder section 17;\n(b) the service, technology or method of delivery improves the provision of\nfinancial services in the Islands;\n(c)\nthe service, technology or method of delivery complies with global\nstandards and best practices for combating money laundering, terrorist\nfinancing and proliferation financing;\n(d) the adoption of new financial services practices and technologies within\nthe Islands is facilitated; and\n(e)\nbest practices and guidance are developed for the virtual asset service\nsector.\n19.\nApplication for a sandbox licence\n19. (1) The Authority may require \u2014\n\nVirtual Asset (Service Providers) Act (2024 Revision)\nSection 19\n\nc\nRevised as at 31st December, 2023\nPage 23\n\n(a)\na person applying to be registered or a registered person; or\n(b) a person applying for a virtual asset service licence or a virtual asset\nservice licensee,\nto apply, instead, for a sandbox licence where the Authority determines that \u2014\n(i)\nthe virtual asset service represents an innovative use of technology\nor uses an innovative method of delivery that requires supervision\nand oversight that is not offered by a licence or registration under this\nAct or any other law;\n(ii) it is in the best interest of the public, existing licensees, licensees,\nregistered persons or the financial markets for the virtual asset\nservice to be temporarily restricted or for specific requirements to be\nplaced temporarily on the provision of the virtual asset service;\n(iii) the virtual asset service uses or promotes technology or method of\ndelivery that may create systemic risk to the financial markets or\notherwise to the jurisdiction; or\n(iv) the virtual asset service poses a money laundering, terrorism\nfinancing or proliferation financing risk that is not properly mitigated\nby the Anti-Money Laundering Regulations (2023 Revision) or this\nAct,\nand the Authority shall cancel the registration or revoke the virtual asset service\nlicence where it has required the person to apply for a sandbox licence.\n(2) A person under subsection (1) who has been directed by the Authority to apply\nfor a sandbox licence shall do so in the manner specified by the Authority and\nshall provide such additional information in support of that application as the\nAuthority may specify.\n(3) A fintech service provider may, but is not required to, apply for a sandbox\nlicence in such manner as may be specified by the Authority.\n(4) An existing licensee who has provided notice and has been directed by the\nAuthority to apply for a sandbox licence shall do so in the manner specified by\nthe Authority.\n(5) An applicant for a sandbox licence shall pay the prescribed assessment fee at\nthe time of submission of the application and the application fee as may be\nspecified by the Authority within thirty days of notification of approval for a\nlicence.\n(6) Where the sandbox application fee remains unpaid within thirty days of\nnotification, the Authority shall cancel its approval of the sandbox licence.\n(7) An applicant for a sandbox licence shall provide such additional information in\nsupport of the application as the Authority may specify.\n\nSection 20\nVirtual Asset (Service Providers) Act (2024 Revision)\n\nPage 24\nRevised as at 31st December, 2023\nc\n\n(8) The Authority in reviewing an application under this section shall take into\nconsideration the matters set out in section 22.\n20.\nCompliance with applicable requirements\n20. (1) Subject to subsection (2), a sandbox licensee that is a virtual asset service\nprovider shall comply with all requirements applicable to virtual asset service\nproviders in this Act.\n(2) The Authority, where it grants a sandbox licence, may \u2014\n(a)\nimpose any of the requirements that are applicable to a virtual asset service\nlicensee;\n(b) impose restrictions that the Authority considers necessary to effectively\nsupervise, monitor and assess the virtual asset service or fintech service\nand such restrictions may relate to \u2014\n(i)\nthe technologies or activities that may be provided;\n(ii) a limit on the number or type of clients to whom the virtual asset\nservice or fintech service may be offered;\n(iii) a limit on the value or amount of virtual asset service or fintech\nservice offered to clients;\n(iv) the imposition of reporting requirements at such intervals as the\nAuthority may require;\n(v) restrictions on the sandbox licensee\u2019s advertising; or\n(vi) requirements for disclosures to be made to clients;\n(c)\nexempt the sandbox licensee from requirements that are applicable to\nvirtual asset service providers or modify any requirement in such manner\nas the Authority considers appropriate;\n(d) require that specified technical or operational functions relating to the\nfintech service or the virtual asset service be maintained in the Islands to\nfacilitate the supervision of the service by the Authority; or\n(e)\nrequire a sandbox licensee who is a virtual asset service provider to comply\nwith the requirement under section 31(1),\nand every imposition, exemption or modification by the Authority shall be in\nwriting.\n(3) Where a requirement is imposed or an exemption or a modification is granted\nunder subsection (2), the Authority may impose such conditions that it considers\nappropriate.\n(4) The Authority shall not impose a requirement or grant an exemption or\nmodification under subsection (2) unless it is satisfied that it is appropriate to\ndo so.\n\nVirtual Asset (Service Providers) Act (2024 Revision)\nSection 21\n\nc\nRevised as at 31st December, 2023\nPage 25\n\n(5) The Authority may remove a requirement, revoke an exemption or vary any\nmodification granted under this section and shall notify the sandbox licensee in\nwriting of its decision and the reason for its decision.\n(6) Notwithstanding its powers under subsection (2), the Authority may, where it\nhas made a determination, take any action necessary, where the Authority is of\nthe opinion that the action is necessary for the protection of clients or potential\nclients and in the interest of the public.\n(7) Before taking any such action under subsection (6), the Authority shall notify\nthe sandbox licensee, in writing, of the actions to be taken and provide its\nreasons for pursuing such action.\n(8) A sandbox licensee served with a notice under subsection (7) may, within a\nperiod of twenty-eight days from the date of the receipt of the notice, make\nwritten representations to the Authority and where such representations are\nmade, the Authority shall take them into account in deciding whether to take the\nproposed action but the Authority shall not be prevented from taking action\nbefore the written representations are made.\n(9) Where a licensed fintech service provider refers to its licence in any material\nthat is published, distributed or otherwise made available to the public, the\nfintech service provider is required to state that the licence is a sandbox licence\nunder this Act.\n21.\nAuthority may amend, extend or revoke\n21. (1) The Authority may \u2014\n(a)\namend the terms of or the restrictions on the sandbox licence;\n(b) extend the duration of the sandbox licence;\n(c)\nwhere the Authority determines that \u2014\n(i)\nthe sandbox licensee who is a virtual asset service provider has\ncontravened the Anti-Money Laundering Regulations (2023\nRevision); or\n(ii) the virtual asset service provided by a sandbox licensee poses a\nmaterial risk to the welfare of the public and the stability of the\nfinancial services in the Islands,\nwithout prior notice, revoke the sandbox licence and require the licensee\nto cease providing the virtual asset service in or from within the Islands;\n(d) revoke a sandbox licence and require the virtual asset service provider to\napply for registration or a virtual asset service licence under this Act\ninstead; or\n(e)\nrevoke a sandbox licence and require the virtual asset service provider to\napply for a licence under another regulatory law.\n\nSection 22\nVirtual Asset (Service Providers) Act (2024 Revision)\n\nPage 26\nRevised as at 31st December, 2023\nc\n\n(2) The Authority may immediately revoke a sandbox licence held by a fintech\nservice provider at any time by providing notice in writing to the sandbox\nlicensee where \u2014\n(a)\nthe licensee fails to comply with a requirement relating to its licence; or\n(b) the Authority, in the performance of its functions under section 18(2), no\nlonger considers the sandbox licence necessary.\n(3) A fintech service provider who holds a sandbox licence may choose to surrender\nthe licence at any time by providing notice to that effect to the Authority.\nPart 4 - Decisions to licence, register, approve issuances\n22.\nDecisions by the Authority to licence or register\n22. The Authority, in making a decision to grant a virtual asset service licence or a\nsandbox licence, to register an applicant or to waive a requirement to licence or\nregister under this Act shall consider the following \u2014\n(a)\nthe size, scope and complexity of the virtual asset service, underlying\ntechnology, method of delivery of the service and virtual asset utilised;\n(b) the knowledge, expertise and experience of the applicant;\n(c)\nthe procedures that the applicant has in place to combat money laundering,\nterrorist financing and proliferation financing;\n(d) the internal safeguards and data protection systems being utilised by the\napplicant;\n(e)\nthe similarity of the virtual asset service to securities investment business\nas defined under the Securities Investment Business Act (2020 Revision) or\nto any other regulated activity under any of the other regulatory laws;\n(f)\nthe risks that the virtual asset service may pose to existing clients, future\nclients, other licensees or to the financial system of the Islands;\n(g) whether the virtual asset service business involves the offering of virtual\nasset custodial services or the operation of a virtual asset trading platform;\n(h) the net worth, capital reserves and financial stability of the applicant;\n(i)\nthe impact that the virtual asset service may have on financial services in\nthe Islands;\n(j)\nthe likelihood that the service will promote innovation, competition and\nbenefits to consumers;\n(k) except for an applicant that is a fintech service provider, the applicant\u2019s\nability to comply with this Act and the relevant requirements of the AntiMoney Laundering Regulations (2023 Revision);\n\nVirtual Asset (Service Providers) Act (2024 Revision)\nSection 23\n\nc\nRevised as at 31st December, 2023\nPage 27\n\n(l)\nthe applicant\u2019s senior officers and trustees are fit and proper persons to\nhold the respective positions;\n(m) the applicant\u2019s beneficial owners are fit and proper persons to have such\nownership or control; and\n(n) the applicant has paid the assessment fee.\n23.\nDecisions by the Authority to approve issuance of virtual assets\n23. (1) In determining whether to approve the issuance of virtual assets pursuant to a\nrequest from a licensee or a registered person, the Authority shall consider the\nfollowing \u2014\n(a)\nthe nature of the virtual asset;\n(b) whether the virtual asset interferes with the functions of the Authority\nrelating to anti-money laundering, combating of terrorist financing and\nanti-proliferation financing;\n(c)\nwhether the issuance is harmful to critical or systemically important\nentities, persons or processes, the local or global financial services markets\nor the public generally;\n(d) whether the virtual asset is a security as defined by the Securities\nInvestment Business Act (2020 Revision);\n(e)\nthe function and purpose of the virtual asset, and if applicable, the nature\nof any underlying asset which the virtual asset may represent or may be a\nderivative of;\n(f)\nwhether the virtual asset service provider wishes to solicit the public\ndirectly for the purchase of the virtual assets;\n(g) the total number of virtual assets that will be issued and available for\npurchase by the issuance and the amount to be raised in the issuance;\n(h) the period of time during which the issuance will take place;\n(i)\nwhether the virtual assets will be issued by way of an obliged virtual asset\ntrading platform or a virtual asset platform which is licensed under this\nAct;\n(j)\nthe anti-money laundering processes utilised by or available to the virtual\nasset issuer;\n(k) the accuracy and completeness of disclosures to be made to the public\nregarding the issuance of virtual assets; and\n(l)\nany other considerations that the Authority considers relevant.\n(2) The Authority shall notify the virtual asset issuer who submitted the issuance\nrequest of its decision within twenty-one days of receipt of the issuance request.\n\nSection 24\nVirtual Asset (Service Providers) Act (2024 Revision)\n\nPage 28\nRevised as at 31st December, 2023\nc\n\nPart 5 \u2013 The Authority: powers and enforcement\n24.\nPowers and duties of the Authority\n24. (1) The Authority shall \u2014\n(a)\nmaintain a general review of the provision of virtual asset services in the\nIslands, including taking reasonable measures to identify persons,\nincluding natural persons, who are providing these services in\ncontravention of this Act, and submit an annual report of this review to the\nCabinet;\n(b) be responsible for supervision and enforcement in respect of virtual asset\nservice licensees, sandbox licensees and registered persons to whom this\nAct applies and for the investigation of persons where the Authority\nreasonably believes that they have contravened the licence or registration\nprovisions in this Act;\n(c)\nwhenever the Authority considers it necessary, examine, the affairs or\nbusiness of any virtual asset service provider by way of the receipt of\nregular returns, on-site inspections, auditor\u2019s reports or in such other\nmanner as the Authority may determine, for the purpose of \u2014\n(i)\nassessing whether a virtual asset service provider is undertaking its\nauthorised activities in accordance with this Act;\n(ii) confirming that the Anti-Money Laundering Regulations (2023\nRevision) are being complied with;\n(iii) confirming that a licensee is in a sound financial position;\n(iv) assessing whether a licensee\u2019s cybersecurity safeguard measures are\nsufficient to protect client information and assets; or\n(v) carrying out any other functions of the Authority;\n(d) ensure that fintech and virtual asset services are offered in a manner that\naccords with the public interest and is conducive to the growth of the\nfinancial services industry; and\n(e)\nmonitor regulatory requirements and the supervisory needs of virtual asset\nservice providers and make recommendations to the Ministry regarding\nchanges to the regulatory laws with a view to ensuring that the regulatory\nlaws provide an effective framework for the supervision of virtual asset\nservices and regulated activities that include the use of virtual assets.\n(2) The Authority may, in writing, authorise any other person to assist it to carry\nout its functions under this Act.\n(3) A person who knowingly or recklessly provides any information to the\nAuthority which is false or misleading in a material respect commits an offence\nand is liable on summary conviction to a fine of ten thousand dollars and to\nimprisonment for six months.\n\nVirtual Asset (Service Providers) Act (2024 Revision)\nSection 25\n\nc\nRevised as at 31st December, 2023\nPage 29\n\n(4) The Authority may, by Order, provide for the listing of newly created virtual\nassets.\n25.\nEnforcement powers of the Authority\n25. (1) Without prejudice to any other action that may be instituted or taken against a\nvirtual asset service provider, if at any time it appears to the Authority that a\nvirtual asset service provider has failed to comply with any of the requirements\nunder this Act, the Authority may, by written notice, direct the virtual asset\nservice provider to comply with the requirement within such period of time and\non such terms and conditions as the Authority may specify and the virtual asset\nservice provider shall comply with the notice.\n(2) The Authority may take any of the steps listed in subsection (3) if it knows, or\nhas reasonable grounds to believe, that a virtual asset service provider \u2014\n(a)\nis, or appears likely to become, unable to meet its obligations as they fall\ndue;\n(b) is carrying on business fraudulently or otherwise in a manner detrimental\nto the public interest, to the interest of its clients or to the interest of its\ncreditors;\n(c)\nhas contravened any provision of this Act, or of any regulations made\nhereunder, or of the Anti-Money Laundering Regulations (2023 Revision);\n(d) has failed to comply with a condition of the respective licence or\nregistration;\n(e)\nhas not conducted the direction and management of its business in a fit and\nproper manner;\n(f)\nhas senior officers, trustees or persons who have acquired ownership or\ncontrol who are not fit and proper persons;\n(g) is a \u201ccorporate services provider\u201d, as defined in Part XVIIA of the\nCompanies Act (2023 Revision), Part 12 of the Limited Liability\nCompanies Act (2023 Revision) or Part 8 of the Limited Liability\nPartnership Act (2023 Revision), and has contravened that Part; or\n(h) has failed to comply with a lawful direction from the Authority.\n(3) The Authority may \u2014\n(a)\nrevoke the virtual asset service licence or a sandbox licence or cancel the\nregistration;\n(b) impose conditions or further conditions upon the licence or amend or\nrevoke any such conditions;\n(c)\napply to the court for any order which is necessary to protect the interests\nof clients or creditors of the licensee or registered person;\n\nSection 25\nVirtual Asset (Service Providers) Act (2024 Revision)\n\nPage 30\nRevised as at 31st December, 2023\nc\n\n(d) publish in the Gazette and in any official publications of the Authority, a\ncontravention by any person of this Act, of any regulations made\nhereunder or of any lawful direction issued by the Authority;\n(e)\nat the expense of the virtual asset service provider, require the licensee or\nregistered person to obtain an auditor\u2019s report on the licensee\u2019s anti-money\nlaundering systems and procedures for compliance with the Anti-Money\nLaundering Regulations (2023 Revision);\n(f)\nrequire the substitution of any senior officer or trustee of the virtual asset\nservice provider whenever appointed, or the divestment of ownership or\ncontrol;\n(g) in the case of a reasonable belief that the virtual asset service provider has\ncontravened the Anti-Money Laundering Regulations (2023 Revision),\nreport the same to the Director of Public Prosecutions;\n(h) require such action to be taken by the virtual asset service provider as the\nAuthority reasonably believes necessary for the purposes of dealing with\nthe circumstances referred to in paragraphs (a) to (g);\n(i)\nin the case of a virtual asset service provider who is also regulated or\nsupervised for virtual asset services in another jurisdiction, notify the\nrelevant regulator or government entity in the respective jurisdictions of\nthe failure to comply with the directive of the Authority;\n(j)\nat the expense of the licensee, appoint a person to advise the licensee on\nthe proper conduct of its affairs and to report to the Authority thereon; or\n(k) at the expense of the licensee, appoint a person who shall be known as the\nAuthority\u2019s appointed controller, to assume control of the licensee\u2019s affairs\nwho shall, subject to necessary modifications, have all the powers of a\nperson appointed as a receiver or manager of a business appointed under\nsection 18 of the Bankruptcy Act (1997 Revision).\n(4) Where the Authority decides to take action under subsections (3)(a) to (3)(i), it\nshall notify the virtual asset service provider in writing, specifying the\nfollowing \u2014\n(a)\nthe action that the Authority has taken or intends to take;\n(b) the reasons for the action, with reference to statutory provisions, and when\nit is to take effect;\n(c)\nwhether, in addition to the rights under paragraph (d), the virtual asset\nservice provider may make representations to the Authority within such\nperiod as may be specified in the notification; and\n(d) the licensee\u2019s right to appeal under section 30 and the procedure therefor.\n(5) A person appointed under subsection (3)(j) or (3)(k) or whose appointment has\nbeen extended under subsection (6)(b) shall, from time to time at the person\u2019s\ndiscretion and in any case within three months of the date of the appointment or\n\nVirtual Asset (Service Providers) Act (2024 Revision)\nSection 26\n\nc\nRevised as at 31st December, 2023\nPage 31\n\nof the extension of the appointment, prepare and furnish to the Authority a report\nof the affairs of the licensee and of the recommendations thereon.\n(6) On receipt of a report under subsection (5), the Authority may \u2014\n(a)\nrevoke the appointment of the person appointed under subsection (3)(j)\nor (3)(k);\n(b) extend the period of the appointment;\n(c)\nsubject to such conditions as the Authority may impose, allow the licensee\nor registered person to reorganise its affairs in a manner approved by the\nAuthority; or\n(d) revoke the licence and apply to the court for an order that the licensee, if\nthe licensee is a company, be wound up by the court in which case the\nprovisions of the Companies Act (2023 Revision) relating to the winding\nup of a company shall apply.\n(7) Notwithstanding any other provision in this Act, the Authority may revoke a\nvirtual asset service licence, a sandbox licence or cancel the registration if the\nlicensee or registered person has ceased, or wishes to cease, carrying on virtual\nasset service, or has not commenced business within one year of the date of the\ngrant of the licence or the registration.\n(8) Whenever the Authority revokes a licence or cancels a registration under this\nsection, notice of such revocation or cancellation shall be published forthwith\nin the Gazette.\n26.\nDirection to cease and desist\n26. (1) Where the Authority is of the opinion that a virtual asset service provider is \u2014\n(a)\ncarrying out, or about to carry out, an act that is an unsafe or an unsound\npractice in conducting the business of the virtual asset service provider; or\n(b) pursuing, or about to pursue, a course of conduct that is an unsafe or an\nunsound practice in the conduct of the business of the virtual asset service\nprovider,\nthe Authority may direct the virtual asset service provider, in relation to the\nvirtual asset service, to cease or refrain from carrying out the act or pursuing the\ncourse of conduct and to carry out such acts as are necessary, in the opinion of\nthe Authority, to remedy or ameliorate its conduct.\n(2) A person who, without reasonable cause, fails to comply with a direction given\nby the Authority under subsection (1), commits an offence and is liable \u2014\n(a)\non summary conviction, to a fine of fifty thousand dollars or to\nimprisonment for one year, or to both; or\n(b) on conviction on indictment, to a fine of one hundred thousand dollars or\nto imprisonment for five years or to both,\n\nSection 27\nVirtual Asset (Service Providers) Act (2024 Revision)\n\nPage 32\nRevised as at 31st December, 2023\nc\n\nand if the offence continues after conviction, the person shall be liable to a fine\nof ten thousand dollars for every day on which the offence continues.\n(3) If the Authority knows, or has reasonable grounds to believe, that any of the acts\nreferred to in section 25(2)(b) through (g) have occurred in relation to a virtual\nasset service provider, the virtual asset service provider commits a breach and\nmay be liable to an administrative fine by virtue of Part VIA of the Monetary\nAuthority Act (2020 Revision).\n27.\nRevocation of licence\n27. (1) The Authority may revoke a virtual asset service licence or a sandbox licence\nwhere it is of the opinion that \u2014\n(a)\nthe licensee has failed to comply with an obligation imposed on it by this\nAct;\n(b) the licensee is carrying on business in a manner that is not permitted by\nthe licence;\n(c) the Authority has been provided with false, misleading or inaccurate\ninformation by or on behalf of the licensee or a person who is a senior\nofficer or trustee of the licensee;\n(d) the interests of the clients or potential clients of the licensee are threatened;\nor\n(e)\nthe licensee has contravened the Anti-Money Laundering Regulations\n(2023 Revision).\n(2) Where the Authority revokes a virtual asset service licence under subsection (1),\nit shall publish a notice to that effect forthwith in the Gazette.\n28.\nShares not to be issued or transferred without the prior approval of the\nAuthority\n28. (1) No shares totalling ten per cent or more of the total shares in a company which\nis a virtual asset service provider under this Act shall be issued, and no issued\nshares or interests shall be voluntarily transferred or disposed of, without the\nprior approval of the Authority.\n(2) For the avoidance of doubt, where the virtual asset service provider is a\npartnership, a partnership interest is equivalent to shares in a company.\n(3) For the purposes of subsections (1) and (2), a virtual asset service provider shall\nprovide such information to the Authority, and within the specific time, as the\nAuthority may require for the purpose of assessing whether persons acquiring\ncontrol or ownership of such shares or partnership interest, as the case may be,\nreferred to in that subsection are fit and proper persons to have such control or\nownership.\n\nVirtual Asset (Service Providers) Act (2024 Revision)\nSection 28\n\nc\nRevised as at 31st December, 2023\nPage 33\n\n(4) For the avoidance of doubt, references to shares representing ten per cent or\nmore of the total voting rights or ownership of a legal person include the\ncumulative acquisition of shares, voting rights which amount to ten per cent or\nmore of the total voting rights of the legal person or legal arrangement and a\nreference to shares being transferred or disposed of includes the transfer or\ndisposal of the legal or the beneficial interest in the shares or interests.\n(5) In the event of shares in a company or the interests in a partnership which is a\nvirtual asset service provider vesting involuntarily or through process of law in\na person, the company or partnership, as soon as it becomes aware of such\nvesting, shall inform the Authority of the number of shares or interests and the\nidentity of the person in whom the shares or interests have vested; and the\ncompany or partnership and the person in whom they have vested shall comply\nwith any instructions as to the licence or registration or the business of the\ncompany or partnership as may be given by the Authority.\n(6) The Authority shall not grant the approval specified in subsection (1) where the\nshareholder or partner of a virtual asset service provider is not a fit and proper\nperson.\n(7) The Authority may exempt from the provisions of subsection (1) a virtual asset\nservice provider with ninety-five per cent or more of their shares publicly traded\non a stock exchange recognised by the Authority, and any such exemption \u2014\n(a)\nshall be subject to the condition that the virtual asset service provider shall,\nas soon as reasonably practicable, notify the Authority of \u2014\n(i)\nany change in control of the virtual asset service provider;\n(ii) the acquisition by any person or group of persons of shares\nrepresenting more than ten per cent of the virtual asset service\nprovider\u2019s issued share capital or total voting rights; or\n(iii) the acquisition by any person or group of persons of shares\nrepresenting more than ten per cent of the issued share capital or total\nvoting rights of the virtual asset service provider\u2019s parent company;\n(b) shall be subject to a condition that the virtual asset service provider shall,\nas soon as reasonably practicable, provide such information to the\nAuthority, within such period of time as the Authority may require, for the\npurpose of enabling an assessment as to whether persons acquiring control\nor ownership of the virtual asset service provider, in the circumstances set\nout in paragraph (a), are fit and proper persons to have such control or\nownership; and\n(c)\nshall be subject to such terms and other conditions as the Authority\nconsiders necessary.\n(8) A person who contravenes this section commits an offence and is liable on\nsummary conviction to a fine of twenty thousand dollars.\n\nSection 29\nVirtual Asset (Service Providers) Act (2024 Revision)\n\nPage 34\nRevised as at 31st December, 2023\nc\n\n29.\nGuidance\n29. (1) The Authority may, after consultation with the Minister and such persons as the\nAuthority considers representative of the virtual asset service sector, issue\nguidance notes for the purpose of giving practical guidance with respect to this\nAct.\n(2) The Authority shall publish in the Gazette any guidance notes and such notice\nshall indicate the date on which the guidance notes come into effect.\n(3) In determining whether a person has complied with any of the requirements\nunder this Act \u2014\n(a)\na court shall take into account any relevant guidance notes issued under\nsubsection (1) which apply to that person; and\n(b) a court may take into account any other relevant guidance issued by a body\nthat regulates, or is representative of, any trade, profession, business or\nemployment carried on by that person.\nAppeals\n30.\nAppeals against decisions made by the Authority\n30. (1) An appeal lies to the court from a decision of the Authority \u2014\n(a)\nfor the refusal to grant a licence or registration;\n(b) revocation of a licence;\n(c)\ncancellation of registration;\n(d) to take enforcement action under section 25;\n(e)\nfor refusal of an application for virtual asset issuance; and\n(f)\nfor refusal of an application of an existing licensee to engage in virtual\nasset service.\n(2) An appeal against the decision of the Authority shall be by way of motion.\n(3) The appellant shall, within twenty-one days after the day on which the Authority\nhas given its decision, serve a notice of motion signed by the appellant or the\nappellant\u2019s attorney-at-law on the Authority of the intention to appeal and of the\ngeneral ground of the appeal.\n(4) A person who is aggrieved by a decision of the Authority may, upon notice to\nthe Authority, apply to the court for leave to extend the time within which the\nnotice of appeal prescribed by this section may be served and the court, upon\nthe hearing of such application, may extend the time prescribed by this section\nas it considers fit.\n(5) The Authority shall, upon receiving the notice of appeal, transmit to the Clerk\nof the court without delay a copy of the decision and all papers relating to the\n\nVirtual Asset (Service Providers) Act (2024 Revision)\nSection 31\n\nc\nRevised as at 31st December, 2023\nPage 35\n\nappeal, but the Authority is not compelled to disclose any information if it is\nconsidered that the public interest would suffer by such disclosure.\n(6) At the hearing of the appeal the appellant shall, before going into the case, state\nall the grounds of appeal on which the appellant intends to rely and shall not,\nunless by leave of the court go into any matters not raised by such statements.\n(7) The court may adjourn the hearing of an appeal and may, upon the hearing\nthereof confirm, reverse, vary or modify the decision of the Authority or remit\nthe matter with the opinion of the court thereon to the Authority.\n(8) An appeal against a decision of the Authority under this section shall not have\nthe effect of suspending the execution of the decision.\n31.\nAudit of accounts\n31. (1) A virtual asset service licensee shall have its accounts audited annually or at\nsuch times as the Authority may require by an auditor approved by the Authority\nwho shall be a member of \u2014\n(a)\nthe Institute of Chartered Accountants in England and Wales;\n(b) the Canadian Institute of Chartered Accountants;\n(c)\nthe Chartered Association of Certified Accountants;\n(d) the American Institute of Certified Public Accountants; or\n(e)\nsuch other accounting professional body or institute approved by the\nAuthority.\n(2) Within six months of the end of a licensee\u2019s financial year, the licensee shall\nforward to the Authority the audited accounts for the financial year just ended.\n(3) Any licensee who fails to comply with subsection (2) within the stated period\nor any extension to the period granted by the Authority for good cause shown,\nis liable to a late filing fee of fifty dollars for each day or part thereof that the\nlicensee fails to comply.\n(4) The Authority may exempt a virtual asset service licensee from the audit\nrequirement under subsection (1) if the Authority determines the requirement to\nbe unnecessary or prohibitive given \u2014\n(a)\nthe size, scope and complexity of the economic activity; and\n(b) the availability of auditing services for the virtual asset service.\n(5) When a licensee who is required to provide audited accounts to the Authority\nchanges its auditor, the Authority may require the former auditor to explain in\nwriting the circumstances giving rise to the change.\n(6) If it appears to the Authority that an auditor has failed to comply with the\nrequirements in section 32(1), the Authority may disqualify the auditor from\nbeing an auditor of a licensee but the Authority may remove any disqualification\n\nSection 32\nVirtual Asset (Service Providers) Act (2024 Revision)\n\nPage 36\nRevised as at 31st December, 2023\nc\n\nimposed under this subsection if it is satisfied that the person in question will in\nfuture comply with the requirements.\n(7) A licensee shall not appoint as an auditor a person disqualified under subsection\n(6).\n32.\nDuty of auditor\n32. (1) If an auditor, in the course of carrying out an audit or producing a report under\nsection 9 becomes aware of or has reasonable grounds to believe that the\nlicensee or registered person \u2014\n(a)\nis or is likely to become unable to meet its obligations as they fall due;\n(b) carrying on or attempting to carry on business otherwise than in\ncompliance with \u2014\n(i)\nthis Act or any regulations made hereunder;\n(ii) Part XVIIA of the Companies Act (2023 Revision), Part 12 of the\nLimited Liability Companies Act (2023 Revision) and Part 8 of the\nLimited Liability Partnership Act (2023 Revision), if the licensee is a\n\u201ccorporate services provider\u201d as defined in that Part;\n(iii) the Anti-Money Laundering Regulations (2023 Revision); or\n(iv) a condition of the licence or registration;\n(c)\nis carrying on or attempting to carry on business in a manner that is\nprejudicial to its clients or is winding up its business voluntarily in a\nmanner that is prejudicial to its clients or creditors; or\n(d) is carrying on or attempting to carry on business without maintaining any\nor sufficient accounting records or record keeping systems to enable the\nauditor to carry out an audit or produce a report,\nthe auditor shall immediately give the Authority and the licensee written notice\nof the knowledge or belief and giving reasons therefor.\n(2) An auditor who contravenes subsection (1) is liable to removal by the Authority\nfrom its list of approved auditors.\n(3) A reference in this section to an auditor carrying out an audit or preparing a\nreport on a licensee or registered person includes an auditor who was engaged\nto carry out such an audit or prepare such a report or who was in the course of\nso doing but resigned before completion or whose contract to carry out same\nwas otherwise terminated.\n(4) No duty to which an auditor of a licensee or registered person may be subject\nshall be regarded as being contravened by reason of the auditor communicating\nin good faith to the Authority any information or opinion on a matter specified\nin subsection (1) or providing any information or opinion in response to a\nrequest made by the Authority pursuant to a power conferred by this Act.\n\nVirtual Asset (Service Providers) Act (2024 Revision)\nSection 33\n\nc\nRevised as at 31st December, 2023\nPage 37\n\n(5) An auditor shall not be liable in damages for anything done or omitted to be\ndone in the discharge or proposed discharge of the auditor\u2019s functions under this\nAct in relation to the preparation of a report or in relation to any notice given\nunder subsection (1) unless it is shown that the act or omission was in bad faith.\n33.\nEntry and search of premises\n33. (1) If the court, on sworn information on oath, is satisfied that the conditions in\nsubsection (2) are fulfilled and either \u2014\n(a)\nthat admission to the premises has been refused, or that a refusal is\nexpected, and that reasonable notice of the intention to apply for the\nwarrant has been given to the occupier;\n(b) that an application for admission, or the giving of such a notice, would\ndefeat the object of the entry; or\n(c)\nthat the case is one of urgency, or that the premises are unoccupied or that\nthe occupier is temporarily absent,\nthe court may, by warrant signed by a judge, authorise a constable of the rank\nof inspector or above to enter the premises, if need be, by reasonable force.\n(2) The conditions referred to in subsection (1) are that there are reasonable grounds\nfor suspecting that \u2014\n(a)\nthere is or has been, on the premises to which entry is sought, any\ncontravention of this Act or the Proceeds of Crime Act (2024 Revision); or\n(b) there is on those premises evidence of any contravention of this Act or \u2014\n(i)\nthe Proceeds of Crime Act (2024 Revision);\n(ii) Part XVIIA of the Companies Act (2023 Revision);\n(iii) Part 12 of the Limited Liability Companies Act (2023 Revision); or\n(iv) Part 8 of the Limited Liability Partnership Act (2023 Revision).\n(3) Every warrant granted under this section shall continue in force for a period of\none month.\n(4) A constable entering any premises by virtue of this section may be accompanied\nby such employees of, or advisers to, the Authority as may be necessary to\nensure the successful execution of the warrant.\n(5) The constable authorised by any such warrant to search any premises may, if so\nauthorised by the warrant, search every person who is found in those premises\nand may seize any documents, computer hardware or mobile devices found in\nthe possession of any such person or in such premises which the constable has\nreasonable ground for believing ought to have been produced pursuant to a\nlawful request from the Authority.\n(6) A person who wilfully obstructs a constable in the exercise of any powers\nconferred on the constable by this section commits an offence and is liable on\n\nSection 34\nVirtual Asset (Service Providers) Act (2024 Revision)\n\nPage 38\nRevised as at 31st December, 2023\nc\n\nsummary conviction to a fine of one hundred thousand dollars and to\nimprisonment for five years.\n(7) The Rules Committee of the Grand Court may make rules for the purposes of\nthis section.\n34.\nWinding up\n34. (1) The Authority may apply to the court for a licensee or a registered person, or a\nformer licensee or registered person, that is or has been in contravention of\nsection 4(1) to be wound up by the court, notwithstanding any winding up of the\ncompany voluntarily.\n(2) On an application under subsection (1), the court may make an order for the\nlicensee or registered person to be wound up by the court if the court is of the\nopinion that the winding up would be in the public interest in all the\ncircumstances of the case.\nPart 6 \u2013 General\n35.\nOffence to carry on business without licence, registration or waiver\n35. (1) A person who carries on, or purports to carry on, virtual asset service in or from\nwithin the Islands for which registration is required who is not a registered\nperson or the holder of a waiver under this Act, commits an offence and is liable\non summary conviction to a fine of twenty-five thousand dollars and to\nimprisonment for one year.\n(2) Where the offence under subsection (1) continues after conviction, the person\nshall be liable to a fine of ten thousand dollars for each day during which the\noffence continues.\n(3) A person who carries on, or purports to carry on \u2014\n(a)\nvirtual asset custody services; or\n(b) operate a virtual asset trading platform,\nin or from within the Islands who is not a licensee or is not a person who is in\nreceipt of a waiver under this Act, commits an offence and is liable on summary\nconviction to a fine of one hundred thousand dollars and to imprisonment for\none year and in the case of a continuing offence, to a fine of ten thousand dollars\nfor each day during which the offence continues.\n\nVirtual Asset (Service Providers) Act (2024 Revision)\nSection 36\n\nc\nRevised as at 31st December, 2023\nPage 39\n\n36.\nOffences by corporations, partnerships, limited liability partnerships, etc.10\n36. (1) Where an offence is committed by a body corporate and it is proved to have\nbeen committed with the consent or connivance of, or to be attributable to any\nneglect on the part of any senior officer of the body corporate, or any person\nwho was purporting to act in any such capacity, that person as well as the body\ncorporate commits that offence and is liable to be proceeded against and\npunished accordingly.\n(2) Where the affairs of a body corporate are managed by its members, subsection\n(1) shall apply in relation to the acts and defaults of a member in connection\nwith the member\u2019s functions of management as if the member were a senior\nofficer of the body corporate.\n(3)11  Where an offence under this Act is committed by a partnership, a limited\nliability partnership or an exempted limited partnership and it is proved that the\noffence \u2014\n(a)  was committed with the consent or connivance of; or\n(b)  is attributable to any neglect on the part of,\n\na partner concerned in the management or control of a partnership or a limited\nliability partnership, or a partner who takes part in the conduct of the business\nof an exempted limited partnership, that partner, as well as the partnership, the\nlimited liability partnership or the exempted limited partnership, as applicable,\ncommits the offence and is liable to be proceeded against and punished\naccordingly.\n(4)12  Where an offence under this Act is committed by an unincorporated association\nother than a partnership, a limited liability partnership or an exempted limited\npartnership and it is proved that the offence \u2014\n(a)  was committed with the consent or connivance of; or\n(b)  is attributable to neglect on the part of,\n\na person concerned in the management or control of the unincorporated\nassociation, that person, as well as the unincorporated association, commits the\noffence and is liable to be proceeded against and punished accordingly.\n37.\nOffences for which there is no penalty\n37. A person who contravenes any provision of this Act for which no penalty is\nspecifically provided commits an offence and is liable on summary conviction to a\nfine of four thousand dollars.\n38.\nFitness and propriety\n38. In determining whether a person is a fit and proper person, regard shall be had to all\ncircumstances including that person\u2019s \u2014\n(a)\nhonesty, integrity and reputation;\n\nSection 39\nVirtual Asset (Service Providers) Act (2024 Revision)\n\nPage 40\nRevised as at 31st December, 2023\nc\n\n(b) competence and capability; and\n(c)\nfinancial soundness.\n39.\nRegulations\n39. (1) The Cabinet may, after consultation with the Authority, make regulations \u2014\n(a)\nprescribing anything which is to be prescribed under this Act; and\n(b) generally for carrying the purposes and provisions of this Act into effect.\n(2) Without prejudice to the generality of the foregoing, such regulations may in\nrespect of registered persons, virtual asset service licensees or sandbox\nlicensees \u2014\n(a)\nspecify standards for the form and content of any advertising or promotion\nof virtual asset service;\n(b) require a registered person, a virtual asset service licensee or a sandbox\nlicensee to make full and proper disclosure to clients of the capacity in\nwhich the registered person or licensee is acting in relation to a particular\nvirtual asset services transaction and whether the transaction is being\neffected for the registered person\u2019s or the licensee\u2019s own account or that\nof any person other than the client;\n(c)\nspecify standards for dealings with clients and clients\u2019 assets, including the\nholding upon trust of clients\u2019 assets by the registered person, virtual asset\nservice licensee or sandbox licensee;\n(d) establish financial requirements and specify standards for financial\nconduct and record keeping and reporting;\n(e)\nspecify disclosure requirements in respect of the amount, value or\narrangements for the payment or provision, of commissions or other\ninducements;\n(f)\nspecify arrangements for the settlement of disputes; and\n(g) specify the nature and extent of any insurance arrangements required of\nthe registered person, virtual asset service licensee or sandbox licensee.\n(3) Regulations made under this Act may provide that the contravention of a\nprovision constitutes an offence and may prescribe penalties for any such\noffence not exceeding the maximum fine and term of imprisonment for any\noffence under this Act.\n(4)  Regulations made under this Act may provide for such savings, transitional and\nconsequential provisions to have effect in connection with the coming into\noperation of any provision of this Act as are necessary or expedient.\n(5)  Regulations made under subsection (4) may be given retrospective operation to\na date that is not earlier than 31st October, 2020.\n(6)  Regulations which are given retrospective operation shall not \u2014\n\nVirtual Asset (Service Providers) Act (2024 Revision)\nSection 40\n\nc\nRevised as at 31st December, 2023\nPage 41\n\n(a)  affect in a prejudicial manner, rights existing before the date on which\nthose regulations come into force; or\n(b)  impose liabilities in respect of anything done or omitted to be done before\nthe date on which those regulations come into force\n40.\nIndemnity\n40. Neither the Cabinet, nor a director or officer of the Authority nor any person\nauthorised in writing by the Authority to assist it in undertaking any of its functions\nunder this Act or appointed pursuant to section 25 shall be liable in damages for\nanything done or omitted to be done in the discharge or purported discharge of their\nfunctions under this Act, unless it is shown that the act or omission was in bad faith.\n41.\nRegulatory law\n41. This Act is a regulatory law for the purposes of the Monetary Authority Act (2020\nRevision).\n\nPublication in consolidated and revised form authorised by the Cabinet this 30th\nday of January, 2024.\nKim Bullings\nClerk of the Cabinet\n\nVirtual Asset (Service Providers) Act (2024 Revision)\n\nENDNOTES\n\nc\nRevised as at 31st December, 2023\nPage 43\n\nENDNOTES\nTable of Legislation history:\nSL #\nLaw\/Act #\nLegislation\nCommencement\nGazette\n\n7\/2023\nVirtual Asset (Service Providers) (Amendment) Act, 2023\n26-May-2023\nLG16\/2023\/s7\n\nVirtual Asset (Service Providers) Act (2022 Revision)\n31-Jan-2022\nLG7\/2022\/s6\n1\/2021\n\nVirtual Asset (Service Providers) (Amendment) Act, 2020\n(Commencement) Order, 2021\n11-Jan-2021\nLG3\/2021\/s3\n\n59\/2020\nVirtual Asset (Service Providers) (Amendment) Act, 2020\n15-Jan-2021\nLG1\/2021\/s3\n\n56\/2020\nCitation of Acts of Parliament Act, 2020\n3-Dec-2020\nLG89\/2020\/s1\n\n35\/2020\nCivil Partnership Law, 2020\n4-Sep-2020\nLG64\/2020\/s1\n137\/2020\n\nVirtual Asset (Service Providers) Law, 2020\n(Commencement) Order, 2020\n28-Oct-2020\nLG80\/2020\/s5\n\n14\/2020\nVirtual Asset (Service Providers) Law, 2020\n31-Jan-2021\nLG40\/2020\/s1\n\nTable of endnote references:\n1 S.2\n\namended by s.2 of Act 7 of 2023.\n2 S.2\n\namended by s.2 of Act 7 of 2023.\n3 S.2\n\namended by s.2 of Act 59 of 2020.\n4 S.2\n\namended by s.2 of Act 7 of 2023.\n5 S.7(1)\n\namended by s.3 of Act 59 of 2020.\n\n6 S.7(1A)\n\ninserted by s.3 of Act 59 of 2020.\n7 S.7(3)\n\namended by s.3 of Act 59 of 2020.\n\n8 S.9(6)\n\namended by s.4 of Act 59 of 2020.\n9 S.15(5A)\n\ninserted by s.5 of Act 59 of 2020.\n10 S.36\n\namended by s.3 of Act 7 of 2023.\n11 S.36\n\namended by s.3 of Act 7 of 2023.\n12 S.36\n\namended by s.3 of Act 7 of 2023.\n\nENDNOTES\nVirtual Asset (Service Providers) Act\n\nPage 44\nRevised as at 31st December, 2023\nc\n\n(Price: $8.80)","akn_extracted_at":"2026-06-22 15:37:59.328105+00","cms_id":"2020-0014","law_type":"principal","year":"2020","number":"14","title":"Virtual Asset (Service Providers) Act","status":"in_force"},"provenance":{"files":[{"file_id":"5657","expr_id":"589","kind":"akn_xml","filename":"2020-0014_2024 Revision.akn.xml","source_url":null,"storage_path":"\/Users\/q\/kyleg-data\/working\/PRINCIPAL\/2020\/2020-0014\/2020-0014_2024 Revision.akn.xml","content_md5":"955f821b493dc37a242fde2d5c3a3d18","byte_size":"94960","http_last_modified":null,"fetched_at":"2026-06-22 15:37:59.878283+00"},{"file_id":"1177","expr_id":"589","kind":"pristine_pdf","filename":"2020-0014_2024 Revision.pdf","source_url":"\/cms\/images\/LEGISLATION\/PRINCIPAL\/2020\/2020-0014\/2020-0014_2024 Revision.pdf","storage_path":"\/Users\/q\/kyleg-data\/pristine\/PRINCIPAL\/2020\/2020-0014\/2020-0014_2024 Revision.pdf","content_md5":"c1e603763a6bb0e7867f6504890e4fc3","byte_size":"1309217","http_last_modified":null,"fetched_at":"2026-06-21 23:09:38.378628+00"},{"file_id":"1178","expr_id":"589","kind":"working_pdf","filename":"2020-0014_2024 Revision.pdf","source_url":"\/cms\/images\/LEGISLATION\/PRINCIPAL\/2020\/2020-0014\/2020-0014_2024 Revision.pdf","storage_path":"\/Users\/q\/kyleg-data\/working\/PRINCIPAL\/2020\/2020-0014\/2020-0014_2024 Revision.pdf","content_md5":"c1e603763a6bb0e7867f6504890e4fc3","byte_size":"1309217","http_last_modified":null,"fetched_at":"2026-06-21 23:09:38.378628+00"}],"paragraph_count":33,"latest_history":null},"quality":{"expr_id":"589","doc_id":"589","quality_state":"needs_review","quality_score":"84","needs_human_review":"t","deterministic_categories":"{duplicate_text,page_header_footer_noise}","llm_categories":"{truncated_text,other}","repair_actions":"{collapse_duplicate_text,manual_review,reextract_full_text,strip_page_furniture}","finding_severity_counts":"{\"low\": 1, \"medium\": 1}","finding_summary":"Extraction appears mostly complete but shows truncation at Section 41; review full text to ensure no missing provisions.","assessed_at":"2026-06-22 15:29:45.387346+00","updated_at":"2026-06-22 15:29:45.387346+00"}}