British Virgin Islands digital assets - October 2026 update

Updates relating to the BVIs implementation of CRS 2.0 and CARF 

The Crypto-Asset Reporting Framework (CARF) and the Common Reporting Standard (CRS) are initiatives developed by the Organisation for Economic Co-operation and Development (OECD), aimed at enhancing global tax transparency through the automatic exchange of financial account information. Whilst CRS was originally launched to cover traditional financial accounts, the updated CRS 2.0 and CARF, unveiled as part of a major OECD reform in 2023, are intended to address the gaps that have formed as the financial landscape has rapidly evolved, most notably with the rise of digital financial products and crypto assets. 

CRS 2.0

The British Virgin Islands (BVI) introduced CRS 2.0 with effect from 1st January 2026, with reporting to the BVI International Tax Authority (ITA) due by May 2027.

For those operating in the crypto asset space, the key changes that were implemented by CRS 2.0 to be aware of include: 

• the expansion of the definition of Investment Entity to capture entities investing in, administering or managing Relevant Crypto-Assets (being digital representations of value that rely on cryptographically secured distributed ledger technology to validate and secure transactions, other than central bank digital currencies (CBDCs) and electronic money products); 
• the expansion of the definition of Financial Assets to include any interest (including a futures or forward contract or option) in a Relevant Crypto-Asset; and 
• the expansion of the scope of the definition of a Financial Institution to include entities that hold specified electronic money products or CBDCs for the benefit of customers, and updated definition of Financial Account to cover accounts holding specified electronic money products or CBDCs.

CARF

Where CRS 2.0 focuses on account-level data, such as balances and income, CARF specifically targets transaction-level data. Under CARF, intermediaries and other service providers facilitating transfers or exchanges involving Relevant Crypto-Assets, such as exchanges, brokers and dealers, will be considered Reporting Crypto-Asset Service Providers, and will be required to gather and report on information in connection with those exchange and transfer transactions. 

In a notice issued by the ITA on 23 October 2025, the ITA confirmed the BVIs commitment to the implementation of CARF in a timeframe that allows for the first exchange between tax authorities in 2028. 

The Appeal of the British Virgin Islands (BVI) Single‑Asset, Closed‑Ended Vehicles for Tokenised Funds and Deal Specific Blockchain Projects

In an industry characterised by rapid technological advancement and frequent product innovation, the ability to move quickly can be a significant competitive advantage. Tokenised fund managers, founders and other market participants need to be able implement new structures and investment strategies within compressed timeframes.  These market participants are increasingly turning to the BVI's single asset, closed-ended, unregulated investment fund structure. 

Under the Securities and Investment Business Act (as revised) ("SIBA") and the BVI Private Investment Funds Regulations (the "PIF Regulatory Framework"), an entity becomes a regulated private investment fund only if it:

• collects and pools investor funds for collective investment, and
• diversifies portfolio risk. 

Where an entity does not diversify portfolio risk, because it makes only one investment, it fails the second limb.  By definition, this removes it from the scope of the PIF Regulatory Framework (and provided there are no redemption rights linked to net asset value, it will also fail to meet the definition of a mutual fund for the purposes of SIBA). 

Real world asset (RWA) tokenisation projects perhaps provide the most compelling use case for the single-asset, closed-ended fund structure within the virtual assets space, as these are often set up with the intention of providing fractional ownership and enhanced liquidity in respect of a specific underlying asset.  Not only is the issuer able to rely on the regulatory clarity offered by the BVI Virtual Assets Service Providers Act, which does not seek to regulate the primary issuance of tokens, but by falling outside SIBA and the PIF Regulatory Framework, the issuer will not be bound by prescriptive fund regulation, enabling greater structuring flexibility, including, for example, in being able to tailor tokenomics, governance arrangements and economic terms to the specific features of the underlying assets and the objectives of the manager, founders or investors. 

Although these tokenised RWA investment vehicles and tokenised funds are among the most visible use cases driving recent interest in single-asset fund structures in the BVI, we are seeing increasingly innovative application in bespoke structured product and structured finance arrangements, including tokenised convertible payout note structures.  Looking ahead, we can foresee further potential adoption in the context of on-chain vaults that require a legal wrapper (using the BVI SPC structure) to facilitate ownership, governance or investor participation (please do contact your usual Carey Olsen contact for more detailed advice on structuring such a project).

Single‑asset, closed‑ended unregulated BVI vehicles are not only a mainstay for private equity and venture co‑investment, they are now a strategic building block in the global digital‑asset and tokenisation ecosystem. Their regulatory simplicity, speed, flexibility and suitability for project‑specific investment, while avoiding the regulatory burdens that apply to diversified investment funds, make them ideal for any investment strategy focused on a single identifiable asset.