Investment advise licence requirements in BVI

[dorien]

Hi,

I am thinking of setting up an offshore in BVI.

The company sells investment strategies of others to clients in a marketplace. We don't hold anyone's money, only use an API to relay signals to our client's exchanges. If anything we may be considered as giving out investment advice although we are just relaying other's advise... and I notice our competitors clearly put 'this is not investment advise' in their terms.

Do you think we'd need a BVI Investment licence, and how much does this cost, BBC seems to say 16k, which is a bit steep for a startup without customers... I was hoping that registring under SIBA licence category 4A might be cheaper?

Any advice on this, or someone who had experience getting investment advice licences? Also notice one of our competitors is in SVG, but I want to be legally ok.

 

[clemens]

As long as you don't hold anyones money I don't believe it requires a license. Have yu spoken to a legal advisor in the BVI ?

 

[dorien]

Not yet, they charge by the hour I think so was afraid that would run up. Do you have any contacts that are good?

 

[Ready Offshore]

Hi,

I am thinking of setting up an offshore in BVI.

The company sells investment strategies of others to clients in a marketplace. We don't hold anyone's money, only use an API to relay signals to our client's exchanges. If anything we may be considered as giving out investment advice although we are just relaying other's advise... and I notice our competitors clearly put 'this is not investment advise' in their terms.

Do you think we'd need a BVI Investment licence, and how much does this cost, BBC seems to say 16k, which is a bit steep for a startup without customers... I was hoping that registring under SIBA licence category 4A might be cheaper?

Any advice on this, or someone who had experience getting investment advice licences? Also notice one of our competitors is in SVG, but I want to be legally ok.

Not yet. There are many options.

 

[PaulKruger]

Not yet, they charge by the hour I think so was afraid that would run up. Do you have any contacts that are good?

you can try with
https://www.offshorebvi.com/fidelity-corporate-services.php
they know alot about the setup of companies and licenses.

 

[FinTech Avenger]

Not yet. There are many options.

@Antonio Napoli BA May I kindly ask you to abide by forum rules and contribute at least something meaningful to this forum? It is prohibited (even if you're gold member advertising your services here) to post meaningless messages that do resemble pure spam in my eyes. @Admin @Martin Everson could you please have a look at this member posting history and give him a warning?

?Hi,

I am thinking of setting up an offshore in BVI.

The company sells investment strategies of others to clients in a marketplace. We don't hold anyone's money, only use an API to relay signals to our client's exchanges. If anything we may be considered as giving out investment advice although we are just relaying other's advise... and I notice our competitors clearly put 'this is not investment advise' in their terms.

Do you think we'd need a BVI Investment licence, and how much does this cost, BBC seems to say 16k, which is a bit steep for a startup without customers... I was hoping that registring under SIBA licence category 4A might be cheaper?

Any advice on this, or someone who had experience getting investment advice licences? Also notice one of our competitors is in SVG, but I want to be legally ok.

"only use an API to relay signals to our client's exchanges" - so in the result an order/contract (financial transaction) is executed automatically? Do you offer your clients those investment strategies as some sort of purchasable MetaTrader plugin or those signals are processed through API and automatically executed?

"we are just relaying other's advise" .....regulation comes with responsibility and this piece sounds very crappy. Regulation's also associated with ongoing costs - 16 k is perhaps for the setup only. Add here capital requirements, qualified director payroll, office rent contract etc.

From your wording in the initial post I can suggest to forget & forfeit the idea of getting regulated for the time being, unless you are looking to run into regulatory or financial problems eventually. IMHO, your best shot would be a SVG IBC where you can still exploit absence of any relevant legislation - it is not illegal to do so (FOREX/BINARY OPTIONS/CRYPTOCURRENCY – Financial Services Authority).

 

[dorien]

Thanks FinTech Guru, I have been considering SVG indeed but couldn't figure out if they have something similar to SIBA.

To clarify a bit:
- We just store their exchange API key. They subscribe to a strategy (e.g. simplistic example golden cross strategy offered by user x), and pay us a monthly fee for relaying signals (we split this with user x). Then we send buy/sell signals to their exchange, as user x sends them to us.

- " this piece sounds very crappy." not 100% sure what you are referring to with this. The only thing we do is relaying the signals that come to use from the vendor users. Is this financial advise? It could be yes or no. It's very unclear to me.

I understand regulation comes with responsibility. I think at the moment it would be good to build up the business with a disclaimer that we are not offering financial advice. But I want to make sure that for the future, we are incorporated in a place were it's affordable to do so...

 

[Martin Everson]

I understand regulation comes with responsibility. I think at the moment it would be good to build up the business with a disclaimer that we are not offering financial advice.

Where will your clients be based?

For example in UK a UK company that would want to offer trading signals etc would take a quick route of applying to be an Appointed Representative of an Authorized Principal with the UK FCA. The Authorized Principal being for example the broker where the trades take place, compliance is done etc. That is the quickest route to being regulated and is kind of like a white label setup. I have not checked if EU countries have a similar setup which may give you access to entire EU rather than just UK.

However whatever you decide DO NOT offer any services to US persons or if your offshore do not also actively offer anything to EU retail clients without being regulated in EU.

Btw Disclaimers do not work. You have to be actively checking and be able to prove in court that your disclaimer policy is being enforced. i.e saying you don't offer services to US persons but then US persons are still able to sign up will get you trouble.

 

[uplana]

However whatever you decide DO NOT offer any services to US persons or if your offshore do not also actively offer anything to EU retail clients without being regulated in EU.

properly the best advice you can get OP !

 

[dorien]

The current idea is to offer services wordwide as long as their country allows crypto trading (i.e. they have a legally allowed and verified exchange account in one of our supported exchanges).

We limit ourselves to certain exchanges, such as FTX and Binance (although the latter is not supported by FCA as I know). Is this what you refer to as brokers of which to become an appointed representative?

I must stress we do not hold any money from any of the clients, and with the encrypted API key we can only do trades, not withdrawals.

 

[Martin Everson]

We limit ourselves to certain exchanges, such as FTX and Binance (although the latter is not supported by FCA as I know). Is this what you refer to as brokers of which to become an appointed representative?

I mean they must be registered with the FCA. Then once they are you can do with them the application process below and your covered.

https://www.fca.org.uk/firms/appointed-representatives-principals/apply

I must stress we do not hold any money from any of the clients, and with the encrypted API key we can only do trades, not withdrawals.

Does not matter and anyway you won't be doing any of that yourself as an AR once registered. Money handling, compliance responsibility etc will be with the AP. That's the whole purpose of relationship.

Otherwise others choose to operate in a gray area with no regulation which is wrong. When it comes to finance this is very risky and can be life changing if you get it wrong and authorities come after you especially US.

 

[dorien]

Yes, this is very interesting to know and we do want to do things by the book.

So from what I read, if we get appropriate SIBA licences in BVI these should be recognized internationally as well though. Or CIMA in Cayman...

I'm in touch with some lawyers but wanted to figure out more on which territory would be most beneficial before paying their hourly fees. I think BVI seems recogned internationally like Cayman, but perhaps with half the licence fees, so it seems like a good option.

Here are some competitors for instance, stackedinvest.com in their terms lists they are not SEC licenced, although I think they are trying.
Zignaly.com is and SVG company, only accepts crypto, and does not mention any licencing.