BVI token launches: why and how to launch a token in the British Virgin Islands

Do you wish to launch a token? If so, you may well have come across the British Virgin Islands. Situated in the Caribbean, this British Overseas Territory has arguably become the world’s best jurisdiction from which to launch a token (we say arguably so - Panama, coming in as a hot second, may well disagree). In particular, the BVI is an excellent place from which to launch utility tokens and governance tokens; depending on the nature of the project, it can also be a very favourable place to launch security tokens. In this article we explain why the BVI is a leading token issuance jurisdiction, what kind of tokens you can launch from the BVI, and how to go about launching them. 

The BVI: what it is and why it works

Known for tourism and financial services, the BVI consists of approximately 60 islands and cays, about 40,000 people, and over 375,000 active companies. Contrary to the more prurient rumours, its name was conferred by Christopher Columbus and arises from the legend of St Ursula; one of many peculiar naming decisions he took on his mission to what he thought was Asia. From the 1970s onward, its troubled early history as a sugar producer was superseded by its birth as the world’s leading destination for offshore company registration, and since then it has flourished as a centre of legal and financial innovation. 

The BVI’s position as a top-tier token jurisdiction arises from a combination of factors. Its decades-long role as a leading international financial jurisdiction means it has a deep bench of experience among local legal & professional services providers, and a high international reputation. It has an English common law based legal system and efficient court processes, both of which encourage engagement from international legal professionals. It is also tax-neutral, meaning that entities won’t be taxed in the BVI for their activities overseas. 

Of particular importance, however, is the BVI’s VASP regime. Uniquely among web3 jurisdictions, the BVI has achieved the feat of what we might infelicitously refer to as being ‘regulatedly unregulated’ - a complicated way of saying it has a light touch legal regime that provides the stability and predictability of settled regulation with enough room for the freewheeling creativity so beloved of web3 entrepreneurs. While VASP activities are regulated, the simple act of issuing a token is not. 

As a result of this flexible and light-touch regime, utility and governance token issuers typically do not need to get a VASP license - saving them and their project a lot of money. At the same time, they also have some predictability and security in their regulatory setup. Because the BVI has already implemented a VASP regime, it is less likely to change it. Entirely unregulated jurisdictions, by contrast, may change from one year to the next if and when they bring in a new token issuance licensing regime. 

What kind of tokens launch from the BVI?

A range of tokens launch from the BVI. The ease and speed with which they do so depends on if and how they trigger VASP and SIBA regulations. 

1) Utility and governance tokens: These are the most common by volume. Founders use a BVI Business Company as the issuer/SPV, and link it to the protocol foundation or devco via ownership and/or contracts. The token’s function is community access, governance voting, or protocol economics rather than a claim on profits or an underlying asset. Where tokens strictly remain utility/governance, the VASP question typically hinges on whether the issuer is intermediating sales for others and whether other activities (custody, exchange) are provided. If they are conducting VASP activities in the BVI, then they will need a VASP license. 

 2) Security tokens: BVI is a major destination for the issuance of security tokens. Any token that appears to be a security or have security-like features is likely to fall within the BVI’s SIBA regime, meaning they will need to get a license. However,  licensing exemptions exist - more details below.

2) Stablecoins and asset-referenced tokens: BVI vehicles are also used for fiat-backed tokens, or those backed by other off-chain assets. Because these models often involve ongoing virtual asset services (e.g. custody, exchange, or transfer of tokens), a VASP registration analysis is essential, and sometimes a BVI exchange/custody approval is relevant if the business model crosses into those rails.

3) “Work” or contributor tokens for DAOs: A BVI company can issue tokens that reward contributors or govern service marketplaces. Vesting schedules, lock-ups, and transfer restrictions are documented in token terms and cap-table/tables of allocations. Here, careful drafting ensures the token is not presented as an investment contract or revenue-sharing instrument. Complying with VASP and SIBA rules is crucial.

4) NFT and access-right tokens: If NFTs are closed-loop, non-transferable, and not for investment, they can fall outside VASP and broader financial-services gates. When NFTs are transferable and used as investment-like instruments, the analysis changes. The Act’s carve-outs and the Guidance’s distinctions matter.

This article will focus on two areas - utility tokens (into which we also bundle governance tokens) and security tokens. 

The BVI VASP regime: license-free token issuance (most of the time)

Why the BVI has license free token issuance for utility and governance tokens

For utility tokens and governance tokens, the BVI VASP regime typically allows license-free token issuance. The 2023 BVI VASP Act sets out when a license/registration is needed for virtual-asset businesses. It prohibits carrying on the business of providing a virtual assets service “in or from within” the BVI without registration, and provides a list of activities that will trigger this registration. As outlined in the Act, regulated activities include hosting wallets or maintaining custody or control over another person’s virtual asset, wallet or private key; providing crypto exchange services between fiat & crypto or crypto and crypto, transferring virtual assets on behalf of someone else, and the provision of financial services relating to the issuer's offer or sale of a virtual financial asset. In short, if you intermediate issuance, listings, exchange, custody or transfers for others as a business, you are likely a VASP and must register. 

To repeat the point: primary token issuance itself (by the issuer for its own account) does not, by itself, equal “carrying on a virtual assets service” because the Act covers services for others. However, the Act also captures “financial services relating to the issuance, offer or sale,” so fact patterns matter. Engage BVI counsel early to avoid surprises.

Businesses who do need to register as a BVI VASP  face a variety of requirements around their application, approval, auditor, authorized representative, compliance officer, AML/CFT obligations, and ongoing reporting. Exchange and custody applicants face additional, exchange-specific risk and systems reviews (e.g., price discovery, market integrity, tech resilience, client disclosures). Such concerns are outside of the scope of this blog post - but, if you do need assistance in this area, DAO SPV can assist using its partner legal firms in the BVI.

If your entity is just issuing utility tokens and governance tokens and not providin regulated services , it is unlikely to fall within the VASP regime. However, other rules may still apply. Among the most important is SIBA. To work out if their project is in fact a governance or utility token in BVI terms, founders must consider BVI securities law.

Quacking like a duck: is your utility token actually a security under SIBA?

Many founders are sure that their tokens are utility tokens, and so don't need to get any form of licence. Sadly, it isn’t that easy. Utility tokens, governance tokens, and security tokens are taxonomic concepts we use to describe the character and purposes of different crypto coins. As far as BVI law goes, they are entirely colloquial terms, and are not written in law. To the BVI authorities, the things that matter are (a) if you are conducting VASP activities and (b) whether or not your token is a security. In this latter regard it is the characteristics of a token that matters, not the description given to it by founders, analysts, and the hypesters of Telegram and Twitter.

The activity of issuing and selling security tokens - tokens that represent financial securities such as company shares - may or may not fall within the VASP regime, but it is very likely to fall under SIBA. SIBA - the Securities and Investments Business Act 2010 - is an important piece of law, for it regulates the provision of investment services in the BVI. According to the act, any entity carrying out ‘investment business’ must only do so if licensed by the FSC. The question of whether or not a virtual asset falls within the scope of SIBA depends on whether or not it has the characteristics of an investment. If the tokens look like shares, fund interests, debt instruments, options, futures, derivatives etc,  your token is a security and it will need to be licensed.

The BVI FSC will assess tokens based upon what they are designed to do and how they are being used. As outlined in a 2020 official guidance document, the FSC will consider:

1. The way the virtual asset (cryptoasset) is being utilised; 
2. The types of business activities being proposed or conducted;
3. Whether the business activities are analogous with those conducted through traditional businesses; and
4. The characteristics and business activities (economic substance) relating to an offering/issuance. 

In other words - if it looks like a duck, walks like a duck, and quacks like a duck, then it is a duck. Anything that feels to the FSC like an investment will be regulated as such. This includes tokens where a value or return is determined by reference to the performance of some other asset or business - these can be deemed as derivatives. Projects seeking clarity on this general point would benefit from a thorough legal analysis - something DAO SPV would be happy to facilitate using its partner firms in the BVI.

The upshot of all this is that if your token does not have any of the characteristics of an investment AND you are not offering any VASP services, then you don’t need to get any license before issuing and selling tokens in the BVI. This, at core, core, is why the BVI has become a leading token jurisdiction.

Security tokens - a SIBA licensing exception

Of course, not everything that looks like a duck is in fact a duck; some are loons, coots or moorhens. So too with BVI securities. Under the SIBA regime, a licensing exemption is granted to companies issuing and buying back their own shares. As a result, the issuers of security tokens can redeem or repurchase their tokens without triggering SIBA. This provides a path forward for some projects seeking to issue security tokens in the BVI, especially those making private offers of securities - the terms of their token could include the right for it to be repurchased by the issuer. Projects here benefit from legal advice, advice we would be happy to facilitate through our local legal network.

Launching a BVI utility token: A step by step guide for founders

Here’s a practitioner playbook for a issuing a utility token or governance token in the BVI - a non-custodial, non-exchange primary issuance of a project’s own tokens—where the issuer does not intermediate for third parties, and which falls outside of SIBA

Step 1: Think what is is you want to achieve

• Ask yourself what it is you want from this project. Why do you want to launch this token? How does it advance your vision of project? What are you incentivising people to do? What benefits does possessing the token give to token holders ? If these are governance tokens, why is it you want to have decentralised governance in the first place, and are you truly prepared to deal with the operational consequences that this may entail?
• Having through through these and similar points, you will be in a better position to move to step 2.

Step 2: Map the token’s legal characteristics

• For compliance purposes and general risk management, a legal opinion will be needed before setting up your token issuance entity. Work with counsel to see how your token interacts with BVI’s VASP and SIBA regime. DAO SPV can introduce you to experienced local web3 lawyers.
• Apply the FSC Guidance and SIBA tests to classify the token (utility, governance, asset-referenced, or security-like). Adjust features, disclosures, and marketing language accordingly. Many projects keep the token strictly functional at genesis to avoid SIBA capture. BVI Financial Services Commission
• Assess VASP touchpoints: As part of this excercise, you need to need answers to these questions, among others:
  • Are you hosting wallets, holding private keys, or custodizing for users?
  • Are you operating a marketplace or facilitating exchange?
  • Are you providing financial services related to an issuer’s sale for others?
  • If yes to any, you’ll need prepare a VASP registration with the FSC.

Step 3: Preparing to incorporate

• Before moving to incorporation, ensure you have all the required KYC documentation for you and any other individuals or entities associated with the project. This means you'll be able to move more quickl.
• Fill in your onboarding forms
• Ensure you have other documents that may be required, like professional references or proof of wealth.

Step 4: Incorporate the corporate vehicle

• Using DAO SPV, form a BVI Business Company (the workhorse corporate form). You appoint at least one director, engage a registered agent, and adopt constitutional documents. BVI companies offer wide objects clauses and board flexibility, which is helpful for web3 treasury and token mechanics.

Step 5: Draft the paper trail

• Board resolutions authorizing the token creation/issuance, adopting Token Terms (T&Cs/whitepaper), and ratifying any SAFT/SAFE-like pre-sales done outside the BVI.
• Disclosure package (whitepaper, risk factors, tokenomics) aligned with your classification analysis.
• Policies: sanctions screening, market-abuse prohibitions (if exchange-listed later), and—if any VASP activity triggers—AML/CTF manuals and governance (MLRO/CO). BVI Financial Services Commission

Step 6: Launch mechanics

• Execute your token generation event (TGE) via audited smart contracts.
• Observe any transfer restrictions and investor eligibility gates you set in Token Terms.
• If you open secondary liquidity, coordinate with your partner exchange(s) to satisfy listing diligence—the BVI Act enumerates exchange obligations around market integrity, disclosures, and tech resilience.
• Market makers: consider working with market makers to ensure your token moves well in the market. DAO SPV can introduce you to selected market making firms.

Step 7: Ongoing compliance

• Update the FSC on material changes, maintain AML/CTF standards, keep statutory books, and file any required audited financials (if VASP).
• If the token later adds profit-share or redemption features, re-run the SIBA analysis—your classification can shift over time.

Launching an (exempted) BVI security token

This is more or less the same as the process to issue a utility token, except your BVI legal opinion must validly identify that your security token project can fall under the BVI’s SIBA licensing exemptions.

Projects that don’t have this exemption must go through the full SIBA licensing process

Additional considerations

Centralised vs non-centralised: for many projects it can make sense for the project leads and/or founders to directly hold the shares in the BVI token issuance entity, or indeed the holding entity that may own it. This particularly suits relatively centralised projects. Projects aspiring to a higher degree of decentralisation may benefit from segregating the ownership and control of the token issuance entity away from the initial founders - something of particular importance to many DAO and protocol projects, and founders operating in anti-crypto jurisdictions. In such cases, projects benefit from having the BVI token issuance vehicle be owned by an orphan entity, the leading example of which is the Cayman foundation.