Operating a crypto business without the right regulatory footing is not merely a compliance oversight. It exposes the entity to enforcement action, frozen payment rails, de-risked banking relationships, and the loss of institutional counterparties who will not trade with an unlicensed operator. For founders and general counsel choosing between the AIFC (Astana International Financial Centre in Kazakhstan) and the BVI (British Virgin Islands), the question is rarely which jurisdiction is "best" in the abstract. It turns on operator profile, user base, banking strategy, and the substance the business is genuinely prepared to commit.
Both regimes offer legitimate, recognized pathways to regulated digital-asset activity. The AIFC, supervised by the Astana Financial Services Authority (AFSA), operates as a common-law enclave within Kazakhstan and has positioned itself as Central Asia's primary crypto licensing hub. The BVI Financial Services Commission administers the VASP Act 2022, a registration-focused regime designed for lighter-touch offshore structures. The gap between those two postures is where the decision lives. This comparison works through six axes that matter to an exchange, custodian, token issuer, or fund – and closes with a decision matrix by operator profile.
Regulatory Architecture: AFSA vs. BVI FSC
The AIFC's AFSA (Astana Financial Services Authority) is a full-spectrum financial regulator with its own common-law courts and an independent arbitration center. It issues activity-specific authorizations and supervises ongoing conduct. The regime was designed to attract institutional-grade operators; the AFSA expects substance – a physical presence, qualified personnel, and governance infrastructure commensurate with the activity being licensed. Regulators in the leading hubs increasingly expect that licensed entities reflect genuine operational commitment, and the AFSA sits firmly in that tradition.
The BVI FSC, by contrast, administers a registration regime under the Virtual Asset Service Providers Act 2022 rather than a full authorization regime. The BVI framework is procedurally lighter, explicitly offshore in orientation, and best understood as a VASP registration rather than a comprehensive regulatory authorization. That distinction matters when you are seeking to open correspondent banking, sign institutional partnerships, or demonstrate regulatory equivalence to a counterpart in a MiCA jurisdiction. In our practice, we see the BVI registration used most effectively as one component of a multi-jurisdictional structure rather than a standalone operating licence.
For an operator building institutional rails, the AFSA authorization carries materially greater weight than a BVI registration with external counterparties. That does not make the BVI wrong – it makes it jurisdiction-specific. Both regulators publish their expectations in detail, and neither tolerates a shell entity with no local connection.
What Licences Can You Actually Obtain?
The AIFC framework recognizes several regulated digital-asset activities: operating a digital-asset trading facility, providing custody services, operating a digital-asset exchange, and related advisory or intermediary functions. Each activity category carries its own authorization, capital expectations, and conduct requirements under the AFSA regime. An operator seeking to combine exchange and custody functions will need authorizations covering each regulated activity – the AFSA does not issue a single consolidated licence for multi-activity businesses without addressing each activity within the scope of authorization.
Under the BVI VASP Act 2022, the BVI FSC issues registrations for virtual asset service providers as defined under the applicable VASP provisions. The registration covers a defined set of VASP activities broadly aligned to the FATF definition, including exchange services, transfer services, and custody. The BVI registration is not a tiered authorization by activity class in the same way the AFSA structure is. This makes initial entry faster in the BVI, but it also means the regulatory signal sent by the BVI registration is less granular – and that granularity matters when a counterparty or bank wants to verify exactly what a regulator has sanctioned.
Token issuers face a sharper distinction. The AIFC has developed guidance and practice around tokenized instruments and digital securities, operating against the backdrop of the AFSA's recognized virtual-asset framework and with access to the AIFC courts for disputes. The BVI's VASP Act is primarily focused on service providers rather than issuers of tokens with security characteristics; an issuer with a token that could be characterized as a security may find the BVI less suitable as a primary issuance jurisdiction than as a holding or fund-domicile structure.
How Much Substance Does Each Jurisdiction Require?
The AFSA requires genuine substance in Nur-Sultan (Astana). This means a registered presence within the AIFC, locally resident or accessible qualified management, and the operational capacity to carry out the licensed activity. The AIFC was designed as a physical financial center, not a mailbox jurisdiction, and the AFSA's authorization standards reflect that. Operators we advise building toward an AIFC authorization generally plan for meaningful office infrastructure, compliance personnel, and a management layer that can be demonstrated to the AFSA during onsite review.
The BVI is a different calculation. The BVI FSC does not require a local operational presence in the way the AFSA does. A BVI-registered VASP may maintain its principal operations elsewhere, subject to the prescribed AML/CFT obligations and the appointment of a registered agent. This creates a lighter substance burden in the BVI – but it also invites the "brass-plate" scrutiny that correspondent banks and institutional counterparties apply. A BVI-registered entity with no identifiable operational substance will face harder questions from financial institutions than an AIFC-authorized operator with demonstrable local governance.
In practice, the substance gap between the two regimes is the single largest factor in the banking conversation. We have seen operators underestimate this cost when selecting an offshore registration as their primary regulatory anchor.
To map the substance, banking, and authorization stack for your specific structure, contact OBOLUS at info@oboluslaw.com. The process above describes the standard path. Your facts – the entity structure, the user base, the banking relationships you need – change the analysis materially.
AML, KYC, and the Travel Rule
Both the AIFC/AFSA regime and the BVI VASP framework operate against the baseline of FATF Recommendations, including FATF Recommendation 15 on virtual assets and the Travel Rule (the obligation to pass originator and beneficiary data with a transfer above the applicable threshold). Neither jurisdiction permits a registered or authorized VASP to sidestep the core FATF AML/CFT obligations – the regulator and the registration framework both carry AML expectations that flow directly from the FATF standards.
The AFSA's AML supervision is embedded in the AIFC's broader regulatory conduct framework, with ongoing supervisory engagement and inspection capacity. The BVI FSC has progressively strengthened its AML/CFT supervisory posture in response to FATF mutual evaluation processes and international pressure on offshore financial centers. The practical implication is that a BVI-registered VASP cannot rely on the registration as evidence that its AML program is sufficient – the program must be built and maintained to a standard that would withstand external review.
For cross-border operators, the Travel Rule implementation can differ in technical detail between the two regimes. Operators we advise on multi-jurisdictional structures routinely address Travel Rule compliance as a separate project: selecting a Travel Rule solution, mapping counterparty VASP identification across the corridors they operate, and ensuring the solution is accepted by financial institution partners. The jurisdictional choice affects which Technical VASP working groups and industry bodies are relevant for compliance infrastructure, but does not eliminate the underlying obligation in either jurisdiction.
Banking and Fiat Rail Reality
Banking access is where the licensing decision becomes commercial reality. An AIFC authorization opens a more credible conversation with regional banking partners in Central Asia, select European banks with emerging-market relationships, and institutional counterparties who require a regulated entity. The AIFC's positioning as a regional financial hub – designed to attract international financial institutions – was intended partly to create banking infrastructure for licensed entities. Whether that infrastructure meets a specific operator's needs depends on the currencies, corridors, and counterparty types involved.
A BVI-registered entity faces a structurally harder banking conversation. The BVI is recognized as an offshore jurisdiction, and the de-risking pressures that global correspondent banks have applied to offshore financial centers affect BVI-registered crypto businesses acutely. Operators in our practice who have run BVI structures alongside a European or Asian operating entity have generally found that the banking weight sits with the operating entity in the regulated hub, not with the BVI holding or registration vehicle.
This is not fatal to the BVI model. A BVI-registered VASP used as a fund or holding vehicle, sitting alongside an operationally licensed entity in a stronger banking jurisdiction, is a common and workable structure. The error is treating the BVI registration as the primary banking anchor for a business that requires significant fiat throughput. If your business model depends on fiat-to-crypto or crypto-to-fiat volume at institutional scale, the BVI alone will not carry that weight.
If your prior structure stalled at the banking layer or an account was closed, a structural review can identify the reason and the route forward. Write to OBOLUS at info@oboluslaw.com. A second read of the entity, licence, and banking combination can surface options that a first-pass structure did not address.
Tax and Structuring Considerations
The BVI imposes no corporate income tax, no capital gains tax, and no withholding tax on distributions – a well-understood feature of BVI company structures that has driven decades of offshore holding vehicle use. For a crypto business, this makes the BVI an attractive holding layer in a multi-entity structure, particularly for a fund vehicle or a token treasury company where the tax efficiency of the BVI holding entity compounds over time.
The AIFC operates within Kazakhstan, which has its own corporate tax regime. The AIFC offers preferential terms for entities operating within the financial center, but those preferences are specific to the AIFC perimeter and subject to Kazakhstani law. Operators considering an AIFC structure should map the interaction between the AIFC's preferential tax treatment and their home jurisdiction's controlled-foreign-corporation rules, transfer-pricing obligations, and treaty network. The AIFC's treaty access through Kazakhstan's network of double-tax agreements can be a material advantage for certain institutional structures, but it requires careful scoping.
In a well-designed cross-border stack, the two jurisdictions can be complementary: an AIFC-authorized operating entity for the regulated activity and banking relationships, with a BVI holding layer for the equity and treasury function. That structure requires deliberate design – the transfer-pricing, management-and-control, and substance tests apply at every level. We map the full stack, including the tax and banking layers, before a client commits to jurisdictional selection.
Decision Matrix by Operator Profile
Choosing between the AIFC and BVI – or combining them – turns on four operator profiles. No single answer applies across profiles, and a blanket verdict in either direction would misrepresent the analysis.
Profile A – Retail or institutional crypto exchange seeking fiat banking and institutional counterparties. The AIFC authorization is the stronger primary licence for this profile. The AFSA regime, the AIFC courts, and the regional banking infrastructure support the exchange's need for credible regulated status and fiat access. Timeline to authorization varies by activity scope and the completeness of the application but is measured in months. The primary risk is underestimating the substance and governance build required before the AFSA will grant authorization.
Profile B – Fund or investment vehicle holding digital assets, with no retail-facing activity. The BVI is a natural domicile for the fund or holding entity, with BVI FSC VASP registration covering the VASP activity footprint. The absence of BVI corporate tax compounds over the fund's life. The key risk is the banking and counterparty credibility question – a BVI fund investing in regulated assets will need a prime broker or custodian relationship that is comfortable with the BVI structure, which is achievable but requires selection care.
Profile C – Token issuer launching a utility or payment token. The analysis depends sharply on the token's legal character. If the token falls within the scope of AFSA's recognized virtual-asset framework, an AIFC authorization provides a credible issuance jurisdiction with dispute-resolution access via the AIFC courts. If the token is a fund interest or security, neither the AIFC nor the BVI alone addresses the full perimeter – the EU, UK, or Singapore regime where the buyers are located will govern, and the jurisdictional choice for the issuer entity is secondary to the securities law question in the distribution jurisdiction.
Profile D – Custodian or trust company holding assets for institutional clients. The AIFC's custody authorization, with its substance and governance requirements, is typically the credible choice for an institutional-grade custodian. The BVI VASP registration covers custody within the VASP activity definition, but an institutional client conducting due diligence on a custodian will apply its own regulatory equivalence assessment – and the AIFC authorization generally fares better in that assessment than a BVI registration alone. Timeline and capital requirements for the AIFC custody authorization should be confirmed against current AFSA guidance at the time of application.
Common Structuring Mistakes in This Comparison
A common assumption is that a single offshore registration is sufficient to serve clients globally. It is not. The jurisdiction of the entity's regulatory registration determines its regulatory status with that regulator. It does not override the regulatory requirements of the jurisdictions where the entity's users and counterparties are located. An exchange registered in the BVI and serving EU retail clients remains subject to MiCA's CASP requirements for those clients. An AIFC-authorized operator with users in the United Kingdom is not exempt from FCA registration under the Money Laundering Regulations for that UK-facing activity.
The second common mistake is treating the BVI as a banking solution. As noted above, the BVI registration does not solve the banking problem – it is a regulatory registration in an offshore jurisdiction with well-documented de-risking exposure. Operators who have structured around a BVI registration expecting institutional banking access have consistently encountered friction at the account-opening stage.
A third mistake is proceeding with jurisdictional selection before the token or activity is properly characterized. In a recent structuring matter, a payments company sought a single VASP registration for a product that combined a payment token, a staking mechanism, and a yield feature. The combination required a regulatory analysis across three separate regulatory categories before the jurisdictional choice could be made. The AIFC was ultimately the better primary jurisdiction, but only because the activity map was built first.
Related at OBOLUS
- Licensing and Registration for Digital-Asset Businesses – the full-spectrum licence advisory service across 70+ jurisdictions
- Digital-Asset Licensing in El Salvador – what businesses need to know about licensing in El Salvador's emerging regime
- Fiat On/Off-Ramp Banking in Lithuania – banking strategy for EU-licensed operators using Lithuanian payment infrastructure
FAQ
How long does a crypto licence take to obtain?
Timeline varies significantly by jurisdiction and licence category. An AIFC/AFSA authorization for a digital-asset trading facility or custody activity is measured in months from submission of a complete application, and the preparation phase – building the governance, compliance, and substance documentation – adds further time before submission. A BVI VASP registration under the VASP Act 2022 typically moves faster procedurally, but the AML/CFT program and corporate setup are prerequisites in both cases. Operators should plan for the preparation phase as the primary variable, not the regulatory review clock alone.
Which jurisdiction is best for licensing my crypto business?
There is no universal answer. The optimal jurisdiction depends on operator profile, activity type, user geography, banking requirements, and tax structure. An exchange seeking institutional banking and fiat rails will generally favor the AIFC authorization. A fund or holding vehicle may be better served by a BVI structure. Many multi-activity businesses use both: an AIFC operating entity and a BVI holding layer. We map the full licence, banking, and tax stack for the specific structure before recommending jurisdictional selection, because a misaligned choice is difficult and costly to reverse.
Do I need a separate custody licence?
In most regulated regimes, custody of digital assets is a separately regulated activity requiring its own authorization or registration. Under the AIFC/AFSA framework, custody is a recognized regulated activity with its own authorization requirements. Under the BVI VASP Act 2022, custody falls within the VASP activity definition and is covered by the VASP registration, but institutional clients may require a more specific authorization for custody purposes. If your business combines exchange and custody functions, both activities must be addressed within the scope of your regulatory authorization – combining them without specific regulatory coverage in each creates residual enforcement risk.
OBOLUS is an independent digital-asset law boutique acting only for businesses. We advise exchanges, custodians, token issuers, and funds on licensing across 70+ jurisdictions, on disputes and on-chain asset recovery across 25+ forums, and on the tax, banking, and compliance that sit around them. Digital assets are the whole of our practice. We map the licence, banking, and tax stack across operating, custody, and payment layers before a client commits to jurisdictional selection – because structural errors at this stage are expensive to correct. To discuss your structure, contact info@oboluslaw.com or message us via t.me/oboluslaw.
By Aisha Tan, Licensing & Jurisdictions Analyst – specializing in comparative jurisdictional analysis for digital-asset exchange, custody, and fund licensing structures across the AIFC, offshore, and emerging regulatory regimes.
This publication is general information about the law and does not constitute legal advice. It is not a substitute for advice tailored to your circumstances. OBOLUS accepts no liability for action taken or not taken on the basis of this material. For advice on your situation, contact info@oboluslaw.com.