Significant amendments to new Virtual Assets law

FILE – An advertisement for Bitcoin cryptocurrency is displayed on a street in Hong Kong .

Vir­tu­al as­sets in­clud­ing cryp­tocur­ren­cies, and vir­tu­al as­set ac­tiv­i­ties, con­tin­ue to gain in promi­nence, as con­fi­dence in the un­der­ly­ing tech­nol­o­gy in­creas­es, sup­port­ed by a grow­ing dis­trust in tra­di­tion­al sys­tems. Trinidad and To­ba­go (‘T&T’) has re­cent­ly for­malised its at­tempt to be­gin reg­u­la­tion of the vir­tu­al as­set sec­tor, with the re­cent pas­sage of the Vir­tu­al As­sets and Vir­tu­al As­set Ser­vice Providers Act, Act No. 12 of 2025 (the ‘VASP Act’), which was as­sent­ed to on 23 De­cem­ber 2025.

The VASP Act reg­u­lates the con­duct of busi­ness con­cern­ing vir­tu­al as­sets and vir­tu­al as­set ser­vice providers in T&T. It in­tro­duces a num­ber of amend­ments to the reg­u­la­to­ry frame­work that was pre­vi­ous­ly pro­posed by the Vir­tu­al As­sets and Vir­tu­al As­sets Ser­vice Providers Bill, 2025 (the ‘Bill’).

Vir­tu­al as­sets are de­fined in the VASP Act as a dig­i­tal rep­re­sen­ta­tion of val­ue which may be dig­i­tal­ly trad­ed, trans­ferred or used for pay­ment or in­vest­ment pur­pos­es, but does not in­clude the dig­i­tal rep­re­sen­ta­tion of fi­at cur­ren­cies, se­cu­ri­ties or oth­er fi­nan­cial as­sets that are cov­ered un­der any oth­er writ­ten law.

Un­like fi­at cur­ren­cy or elec­tron­ic mon­ey, vir­tu­al as­sets are nei­ther is­sued nor guar­an­teed by any ju­ris­dic­tion. They op­er­ate us­ing blockchain tech­nol­o­gy or dis­trib­uted ledger tech­nol­o­gy which fa­cil­i­tate peer-to-peer trans­ac­tions. While vir­tu­al as­sets en­cour­age fi­nan­cial in­clu­sion and re­duce trans­ac­tion costs, its anonymi­ty and bor­der­less na­ture cre­ate en­hanced risks and ren­der them as be­ing quite sus­cep­ti­ble to mon­ey laun­der­ing, fraud and the fi­nanc­ing of ter­ror­ist ac­tiv­i­ties.

The VASP Act main­tains the reg­u­la­tion of the busi­ness of “vir­tu­al as­set ac­tiv­i­ties”. In par­tic­u­lar, un­der the VASP Act, the con­duct­ing, on be­half of an­oth­er per­son, of “vir­tu­al as­set ac­tiv­i­ties” as a busi­ness in or from with­in T&T, is pro­hib­it­ed, un­less one of the fol­low­ing two con­di­tions are sat­is­fied:

* The T&T Se­cu­ri­ties and Ex­change Com­mis­sion (the ‘TTSEC’) grants au­tho­ri­sa­tion to such a busi­ness un­der the VASP Act; or

* The per­son con­duct­ing the busi­ness of vir­tu­al as­set ac­tiv­i­ties on be­half of an­oth­er per­son, holds a li­cence re­ferred to as a Cer­tifi­cate of Ac­cep­tance, to op­er­ate in a reg­u­la­to­ry sand­box.

The busi­ness of vir­tu­al as­set ac­tiv­i­ties is de­fined in the VASP Act as in­clud­ing the con­duct of one or more of the fol­low­ing ac­tiv­i­ties, for or on be­half of an­oth­er per­son:

— The ex­change be­tween vir­tu­al as­sets and fi­at cur­ren­cies;

— The ex­change be­tween one or more forms of vir­tu­al as­sets;

— The trans­fer of vir­tu­al as­sets;

— The safe­keep­ing or ad­min­is­tra­tion of vir­tu­al as­sets or in­stru­ments en­abling con­trol over vir­tu­al as­sets;

— The par­tic­i­pa­tion in and pro­vi­sion of fi­nan­cial ser­vices re­lat­ed to an of­fer of an is­suer or sale of a vir­tu­al as­set; and

— Such oth­er ac­tiv­i­ty as may be pre­scribed.

What is crit­i­cal to note is that the VASP Act pro­hibits the TTSEC from grant­i­ng au­tho­ri­sa­tion to any per­son in re­spect of op­er­at­ing a busi­ness in vir­tu­al as­set ac­tiv­i­ties, un­til the end of 2026 ( De­cem­ber 31, 2026). This rep­re­sents a shift away from the ini­tial­ly pro­posed De­cem­ber 31, 2027 date.

Fur­ther to note is that any li­cence or cer­tifi­cate of reg­is­tra­tion that was pre­vi­ous­ly is­sued un­der any writ­ten law pri­or to the VASP Act would not be valid to per­mit the reg­u­lat­ed vir­tu­al as­set ac­tiv­i­ties out­lined above.

This is par­tic­u­lar­ly im­por­tant to note as, al­though T&T has not pre­vi­ous­ly passed leg­is­la­tion aimed at reg­u­lat­ed vir­tu­al as­sets and vir­tu­al as­set providers, T&T at­tempt­ed to ex­ert some form of su­per­vi­so­ry con­trol over vir­tu­al tech­nolo­gies by adopt­ing a gen­er­ous in­ter­pre­ta­tion to gen­er­al leg­isla­tive pro­vi­sions un­der the Fi­nan­cial In­sti­tu­tions Act, the Se­cu­ri­ties Act, and the Cen­tral Bank Act.

The VASP Act ex­press­ly clar­i­fies that per­sons who mere­ly hold vir­tu­al as­sets may trans­act for their own ac­count, pro­vid­ed such ac­tiv­i­ty is not con­duct­ed as a busi­ness or on be­half of an­oth­er per­son. The VASP Act states that noth­ing shall pre­vent a per­son who owns a vir­tu­al as­set from pur­chas­ing goods or ser­vices us­ing the vir­tu­al as­set, or from buy­ing a vir­tu­al as­set from an­oth­er per­son or sell­ing a vir­tu­al as­set which they own, to an­oth­er per­son. How­ev­er, such ac­tiv­i­ty must not be con­duct­ed as a busi­ness or on be­half of an­oth­er per­son.

Any per­son who, pri­or to the com­mence­ment of the VASP Act, car­ried on the busi­ness of a vir­tu­al as­set provider, is re­quired to no­ti­fy the TTSEC, with­in one month of the VASP Act’s com­mence­ment, that it car­ries on such busi­ness.

With­in three months of the com­mence­ment of the VASP Act, the per­son is re­quired to cease the vir­tu­al as­set ac­tiv­i­ty. Af­ter the three month pe­ri­od ends, the per­son will be re­quired to no­ti­fy the TTSEC with­in 14 days that the vir­tu­al as­set ac­tiv­i­ty has ceased. This is sub­ject, of course, to any au­tho­ri­sa­tion un­der the VASP Act to con­duct any per­mit­ted ac­tiv­i­ties.

A per­son who fails to com­ply, or who know­ing­ly or reck­less­ly makes a false or mis­lead­ing state­ment in re­la­tion to any doc­u­ment to be sub­mit­ted to the TTSEC, com­mits an of­fence and will be li­able to a fine and to im­pris­on­ment.

No­ti­fi­ca­tions must be sub­mit­ted in the form and man­ner to be pre­scribed by the TTSEC.

A sig­nif­i­cant de­vel­op­ment in the VASP Act, when com­pared to the Bill, is the cre­ation of a reg­u­la­to­ry sand­box. The sand­box will be ad­min­is­tered by the TTSEC and au­tho­ris­es vir­tu­al as­set ser­vice providers that were op­er­at­ing pri­or to the com­mence­ment of the VASP Act, to be con­duct­ed un­der cer­tain con­di­tions, and for the du­ra­tion of the pe­ri­od be­fore the TTSEC grants full au­tho­ri­sa­tion af­ter the end of 2026, sub­ject to re­ceipt of a Cer­tifi­cate of Ac­cep­tance. One ac­tiv­i­ty in par­tic­u­lar, would not be au­tho­rised to be con­duct­ed in the reg­u­la­to­ry sand­box; that of the safe­keep­ing or ad­min­is­tra­tion of vir­tu­al as­sets or in­stru­ments en­abling con­trol over vir­tu­al as­sets.

El­i­gi­ble vir­tu­al as­set ser­vice providers that were op­er­at­ing pri­or to the com­mence­ment of the VASP Act may ap­ply for a Cer­tifi­cate of Ac­cep­tance to use the Reg­u­la­to­ry Sand­box, but cer­tain leg­isla­tive cri­te­ria must be sat­is­fied in or­der to do so.

This “sand­box li­cence” ap­proach re­flects the ap­proach tak­en by both the Ba­hamas and the Cay­man Is­lands, both of which pos­sess regimes that pri­ori­tise reg­u­la­tion, but not at the ex­pense of in­no­va­tion and de­vel­op­ment of the in­dus­try.

The VASP Act re­quires reg­u­lat­ed per­sons to demon­strate a readi­ness to com­ply with AML/CFT/CPF mea­sures, in­clud­ing tar­get­ed fi­nan­cial sanc­tion oblig­a­tions un­der the Eco­nom­ic Sanc­tions Act or oth­er re­lat­ed law su­per­vised by the TTSEC, as well as on­go­ing AML/CFT/CPF com­pli­ance.

Un­der the VASP Act, un­less au­tho­rised by the TTSEC, there is now a statu­to­ry pro­hi­bi­tion on ad­ver­tis­ing, invit­ing the pub­lic to par­tic­i­pate in any vir­tu­al as­set ac­tiv­i­ties with that per­son or any oth­er per­son.

The Vir­tu­al As­sets and Vir­tu­al As­set Ser­vice Providers (Forms and Fees) Reg­u­la­tions 2025 (the ‘VASP Reg­u­la­tions’), which pro­vides the pro­ce­dur­al frame­work for com­pli­ance with the VASP Act, were al­so re­cent­ly passed.

The VASP Reg­u­la­tions con­tain the of­fi­cial forms that en­ti­ties and in­di­vid­u­als must com­plete and sub­mit to the TTSEC. Sched­ule 1 of the reg­u­la­tions pro­vides forms for the req­ui­site statu­to­ry no­tices name­ly:

* A de­c­la­ra­tion of an ex­ist­ing vir­tu­al as­set ser­vice provider busi­ness;

* A no­tice of ces­sa­tion of an ex­ist­ing vir­tu­al as­set ser­vice provider busi­ness;

* The ap­pli­ca­tion form for a Cer­tifi­cate of Ac­cep­tance to op­er­ate with­in a Reg­u­la­to­ry Sand­box; and

* The form of the Cer­tifi­cate of Ac­cep­tance it­self.

Sched­ule 2 sets out the statu­to­ry fees payable. Ap­pli­cants must pay $10,000 up­on sub­mis­sion of an ap­pli­ca­tion to par­tic­i­pate in the Reg­u­la­to­ry Sand­box and $20,000 up­on ap­proval and is­suance of a Cer­tifi­cate of Ac­cep­tance.

As a con­se­quence of the VASP Act, amend­ments to re­lat­ed leg­is­la­tion, name­ly the Pro­ceeds of Crime Act, Chap. 11:27, the An­ti-Ter­ror­ism Act, Chap. 12:07, the Counter-Pro­lif­er­a­tion Fi­nanc­ing Act, No. 8 of 2025, the Fi­nan­cial In­tel­li­gence Unit of Trinidad and To­ba­go Act, Chap. 72:01, and the Se­cu­ri­ties Act, Chap. 83:02 were re­quired to be made, and were so made.

T&T has pro­ceed­ed with its in­cor­po­ra­tion of a vir­tu­al as­set and vir­tu­al as­set ser­vice provider reg­u­la­to­ry frame­work due to in­creased con­cern of crim­i­nal ex­ploita­tion. In the Fi­nan­cial Ac­tion Task Force (the FATF)’s most re­cent tar­get­ed up­date on the glob­al im­ple­men­ta­tion of AML/CFT mea­sures to vir­tu­al as­sets and vir­tu­al as­set ser­vice providers, it not­ed that stronger ac­tion was need­ed to safe­guard the in­tegri­ty of the in­ter­na­tion­al fi­nan­cial sys­tem, as reg­u­la­to­ry fail­ures in one ju­ris­dic­tion could have glob­al con­se­quences.

The re­port notes that the use of sta­ble­coins a form of cryp­tocur­ren­cy, by var­i­ous il­lic­it ac­tors, ter­ror­ist fi­nanciers, and drug traf­fick­ers, has con­tin­ued to in­crease. In­deed, dur­ing 2025, the largest sin­gle vir­tu­al as­set theft in his­to­ry oc­curred, with US$1.46 bil­lion be­ing stolen from the vir­tu­al as­set ser­vice provider By­Bit.

With on­ly 3.8 per cent of the stolen funds be­ing re­cov­ered, there is al­so a need to ad­dress as­set re­cov­ery chal­lenges and im­prove in­ter­na­tion­al co-op­er­a­tion. The FATF al­so not­ed that there has been a sig­nif­i­cant uptick in the use of vir­tu­al as­sets in fraud and scams, with one in­dus­try par­tic­i­pant es­ti­mat­ing that there was ap­prox­i­mate­ly US$51 bil­lion in il­lic­it on­chain ac­tiv­i­ty re­lat­ing to fraud and scams in 2024.

Notwith­stand­ing the sig­nif­i­cant lev­el of risk in vir­tu­al as­sets and its re­lat­ed busi­ness, it fa­cil­i­tates eas­i­er, faster and more eco­nom­i­cal pay­ment, pro­vide al­ter­na­tive meth­ods for pay­ment in cir­cum­stances where per­sons do not have ac­cess to reg­u­lar fi­nan­cial prod­ucts, and act as a po­ten­tial hedge against eco­nom­ic volatil­i­ty.

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