More than $1 out of every $10 of the world’s tokenized US Treasuries is issued by a company incorporated in the British Virgin Islands.
That places the small Caribbean territory behind only the United States as a key jurisdiction for the rapidly growing asset class, according to BVI Finance.
BVI Finance’s Destination Digital report in June found that BVI entities accounted for approximately $1.5 billion of the $14.98 billion global market for tokenized US Treasuries as of June 1.
A growing list of digital asset firms now call the British Virgin Islands home, including Kraken’s parent company, Payward, Bitstamp (recently acquired by Robinhood), 1inch and Bitfinex.
The territory boasts a stablecoin market cap of about $1.2 billion held in BVI-linked addresses and has roughly 28,000 stablecoin asset holders.
More than 25 virtual asset service providers (VASPs) have been approved under the BVI’s VASP regime, and, according to Bernstein Research, the Islands host 305 tokenized securities — the highest count for any single jurisdiction in the RWA.xyz dataset.
US tokenized securities distributed value by jurisdiction. Source: Destination Digital
The statistics suggest the Virgin Islands has become one of the world’s top crypto hotspots, but the reality is a little more nuanced.
Tokenized assets are designed to be borderless, and crypto projects often have the choice of which offshore jurisdiction to incorporate in.
In most cases, digital asset companies aren’t physically relocating to the Virgin Islands; they’re simply using the territory to incorporate legal entities, such as token issuers, treasury vehicles, holding companies or special purpose vehicles (SPVs).
Crypto companies aren’t just choosing BVI for tax reasons
Andrew Jowett, a partner at Appleby (BVI) Ltd who advises digital asset businesses on corporate structuring, told Cointelegraph that clients researching the BVI typically compare several jurisdictions, such as the Cayman Islands, United Arab Emirates, Singapore and Switzerland.
Despite long-held assumptions about offshore Caribbean tax havens, tax neutrality is no longer the primary driver.
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“The overriding factor for choosing the BVI has been digital asset regulation and not tax,” Jowett said. The British overseas territory does have attractive tax policies, and imposes no corporate income tax or capital gains tax on BVI companies.
But all the leading crypto hubs now have favorable crypto tax policies, meaning it’s no longer the deciding factor.
The Cayman Islands imposes no corporate income tax or capital gains tax, and the UAE has zero personal income tax or federal corporate tax on qualifying free zone entities.
“Tax neutrality is table stakes,” said Saeed Al-Marri, chief executive of digital asset infrastructure firm Ethra, which is incorporated in the BVI. He added that the BVI provides legal certainty and clarity, factors he said will determine which jurisdictions survive institutional adoption.
LTP is an institutional digital asset infrastructure provider that operates regulated entities in the BVI, Hong Kong, Australia and the UAE. Its founder and chief executive, Jack Yang, told Cointelegraph that while favorable taxation is relevant for cross-border structures, it is secondary to legal and regulatory certainty as tokenization moves further into institutional finance.
“A tax-neutral structure that cannot pass review by banks, custodians, auditors, investment committees, or regulators has limited practical value,” he said.
Number of tokenized securities by jurisdiction. Source: Destination Digital
Orest Gavryliak, chief legal officer at decentralized exchange aggregator 1inch, which is incorporated in the BVI, said that more and more decentralized finance (DeFi) protocols are choosing jurisdictions that provide predictable rules, rather than simply the lowest tax burden.
“Jurisdiction isn’t exactly becoming irrelevant, but its role is changing,” Gavryliak told Cointelegraph. “Protocols are increasingly weighing factors such as regulations, institutional credibility and long-term sustainability.”
Crypto hubs now compete on legal infrastructure
Jurisdictions vying to be “crypto hubs” like Singapore and the UAE increasingly compete via favorable legal infrastructure and licensing regimes, such as Singapore’s Payment Services Act and Dubai’s Virtual Assets Regulatory Authority (VARA) rulebooks.
The BVI introduced the Virtual Assets Service Providers Act (VASP Act) in 2023, overseen by the BVI Financial Services Commission (FSC).
Compared with many larger financial centers, it offers a speedy turnaround, responds to VASP applications within six weeks and aims to complete the review process within six months, according to BVI Finance and FSC guidance.
Jowett said beyond favorable tax regimes, clients prioritize “ease of launch” and efficient corporate structuring, which has long been part of the BVI’s appeal. Companies can be set up quickly, the legal framework is flexible, and ongoing reporting is generally lighter than in onshore jurisdictions.
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The Virgin Islands has also historically been favored because it offers more corporate confidentiality than many larger financial centers.
While BVI companies are still subject to anti-money laundering (AML) and know-your-customer (KYC) requirements, beneficial ownership information is held by registered agents rather than a public register, which reduces disclosure requirements.
British Virgin Islands. Source: Destination Digital
However, none of the companies interviewed by Cointelegraph cited tax neutrality or greater corporate confidentiality as deciding factors for incorporating in the BVI, pointing instead to legal certainty, regulatory clarity and corporate flexibility.
Incorporating, not physically relocating to the Virgin Islands
Yang told Cointelegraph that LTP does not employ full-time staff “on the ground.” Instead, the entity is overseen by its board and supported by staff from elsewhere in the LTP group.
The same distinction can be seen elsewhere in the industry. Kraken’s parent company, Payward, is incorporated in the BVI, but the exchange’s operations are primarily based in the United States, while 1inch’s team and operations are spread across multiple jurisdictions.
The BVI isn’t winning the race to attract glitzy headquarters or large-scale engineering teams. Instead, it has become the legal home for many digital asset businesses, while much of the work happens elsewhere. For jurisdictions competing to attract the industry, that just may be enough.
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