Centralized exchange in Antigua and Barbuda

The definition of 'Operating a Digital Asset Exchange' must account for evolving regulatory frameworks such as MiCA, the operational distinction between centralized (CEX) and decentralized (DEX) platforms, and the jurisdictional lack of uniform clarity, meaning it does not directly and uniformly apply to all cryptocurrency exchanges as a single, stable category.

The DABA requires a licensee to maintain capital sufficient to meet its liabilities and obligations.

The FSRC determines the specific minimum capital requirements, which can vary based on the type and scope of the digital asset business activities. Historically, capital requirements for various financial licenses in offshore jurisdictions can range from USD $100,000 to $250,000 or more, and for digital asset businesses, it's expected to be substantial to ensure solvency and protect clients. Applicants must demonstrate robust financial standing.

This is a cornerstone requirement, heavily influenced by FATF standards. Licensees must implement comprehensive Anti-Money Laundering (AML) and Counter-Financing of Terrorism (CFT) policies and procedures.

Customer Due Diligence (CDD): Robust KYC procedures for identifying and verifying clients (individuals and legal entities).

Ongoing Monitoring: Continuous monitoring of transactions and business relationships for suspicious activity.

Reporting: Reporting of suspicious transactions to the national Financial Intelligence Unit (FIU).

Sanctions Screening: Screening clients against national and international sanctions lists.

Record Keeping: Maintaining records for a specified period (typically 5 years).

Compliance with the Travel Rule for virtual asset transfers, now integrated under frameworks like MiCA, requires VASPs to obtain and transmit originator and beneficiary information, including standardized identifiers such as Legal Entity Identifiers (LEIs) where applicable, as part of evolving global regulatory infrastructure.

While not always a requirement for a physical office for all license types, entities generally need to establish a significant operational presence, which often includes a physical office, local management, and a registered agent in Antigua and Barbuda.

Key personnel, such as the Compliance Officer and Money Laundering Reporting Officer (MLRO), may be required to be resident in Antigua and Barbuda.

All directors, senior management, significant shareholders, and beneficial owners must undergo rigorous "fit and proper" assessments by the FSRC. This involves background checks, demonstrating competence, integrity, and sound financial standing.

Technology and Security:

Applicants must demonstrate that they have robust and secure IT systems, cybersecurity measures, data protection protocols, and business continuity plans to protect client assets and data. This includes cold storage solutions for large holdings of digital assets.

Mandatory Licensing: Any person carrying on a "digital asset business" in or from Antigua and Barbuda, which includes providing custody services, must obtain a license from the FSRC.

Regulatory Reference: Digital Asset Business Act, 2020, Section 3(1): "No person shall carry on a digital asset business in or from Antigua and Barbuda without a licence granted by the Commission under this Act."

Definition of Custody Services: The Act defines "digital asset business" to include "digital asset custody services" (Section 2(1)(d)).

Trust and Separation: Licensees providing digital asset custody services are explicitly required to hold client digital assets on trust for the client and separately from the licensee's own digital assets.

Adequate Indemnity: Licensees must maintain adequate insurance or other indemnity arrangements to protect their clients. The specific amount or type of insurance is generally determined by the FSRC based on the scope and nature of the business.

Implied Security Measures: While the Act does not explicitly use the term "cold storage," it mandates robust security measures that would typically necessitate the use of cold storage for a significant portion of client assets.

Licensed Custodian: The DABA defines "custody services" as a digital asset business but does not have a separate, explicit definition of a "qualified custodian" in the same vein as some other jurisdictions (e.g., the US SEC's definition which typically refers to banks or trust companies).

Instead, any entity that provides digital asset custody services in or from Antigua and Barbuda is considered a licensed custodian if they comply with the DABA and are granted a license by the FSRC. The "qualification" is tied to obtaining and maintaining this license, adhering to the Act's provisions, and satisfying the FSRC's requirements.

The correct name of the Antigua & Barbuda legislation is the Digital Assets Business Act, 2020 (as amended by the Digital Assets Business (Amendment) Act, 2020), not 'Digital Assets (Business) Act, 2020 (DAFIA)'.

Identification and Verification:

For Individuals: Obtain and verify identity using reliable independent sources (e.g., government-issued photo ID, proof of address, date of birth, nationality).

For Legal Persons/Arrangements (Companies, Trusts): Obtain and verify identity of the entity, its legal form, proof of existence, powers governing the entity, names of relevant persons (directors, trustees), and the beneficial owners (persons who ultimately own or control 25% or more of the entity).

Scrutinize transactions throughout the course of the relationship to ensure they are consistent with the VASP's knowledge of the customer, their business, and risk profile.

Keep customer identification data, beneficial ownership information, and risk assessments up-to-date.

Apply risk-calibrated, continuous, and technology-driven Enhanced Due Diligence (EDD) for higher-risk customers, integrated into a dynamic control plane rather than a static checklist.

Politically Exposed Persons (PEPs) and their family members/close associates.

Customers from AG (Antigua and Barbuda) are from a jurisdiction under increased monitoring by FATF, but FATF policy explicitly prohibits de-risking or blanket exclusion of all customers from such jurisdictions, requiring instead a risk-based approach.

Sanctions Screening: Screen customers and transactions against national and international sanctions lists.

Reporting Obligation: If a VASP knows, suspects, or has reasonable grounds to suspect that funds are proceeds of a criminal activity, or are related to terrorist financing, it must promptly report this to the FIU. This applies regardless of the amount or whether the transaction is completed.

Nature of Regulation: The Financial Services Regulatory Commission (FSRC) of Antigua and Barbuda is the primary regulator for financial services, including digital assets. Antigua enacted the Digital Assets Business Act (DAB Act) in 2020 to regulate virtual asset service providers (VASPs). Their approach tends to be more focused on licensing and compliance rather than frequent public enforcement actions against major players.

Transparency: Public disclosure of enforcement actions, especially with specific penalties and dates, may be less common or less detailed in smaller jurisdictions compared to larger financial centers like the US, UK, or EU.

Jurisdictional Focus: While companies may incorporate in Antigua, their primary operational hubs and customer bases often lie elsewhere, leading to enforcement actions being initiated by regulators in those other jurisdictions.

Regulator Name: Financial Services Regulatory Commission (FSRC)

Relevant Legislation: Digital Assets Business Act (DAB Act) 2020

Scope: The DAB Act governs any person carrying on or purporting to carry on a digital assets business from within Antigua and Barbuda or to or from Antigua and Barbuda, requiring licenses for activities such as virtual asset exchange, transfer, custody, and participation in financial services related to initial coin offerings.