Brunei -- Licensing Requirements Regulatory Overview

**No Specific VA Licensing Regime:** There is no dedicated law or regulation in Brunei that specifically defines, regulates, or licenses virtual asset service providers (VASPs) for activities like operating crypto exchanges, providing crypto custody, or processing crypto payments.

**AMBD Warnings:** AMBD has consistently warned the public about the risks associated with investing in virtual currencies and participating in Initial Coin Offerings (ICOs), highlighting their speculative nature, volatility, lack of underlying value, and the absence of regulatory protection.

**VAs Not Legal Tender:** Cryptocurrencies are not recognized as legal tender in Brunei.

Money-changing and remittance activities involving the exchange or transfer of fiat funds in Brunei must be licensed by the Brunei Darussalam Central Bank (BDCB) under the current regulatory framework; BDCB is the successor to the Autoriti Monetari Brunei Darussalam (AMBD), and licensing is no longer issued under the 2011 Order in AMBD’s name.

**Banking Business:** Under the Banking Order, 2006, if it involves taking deposits or providing other banking services.

**Custody Providers:** If a custody provider holds fiat currency on behalf of customers, or offers services that resemble trust services or deposit-taking, it could potentially be subject to:

**Trustee Act** (though less likely for pure crypto custody)

**Payment Processors (involving Fiat):** If a payment processor facilitates payments where fiat currency is transferred (even if converted to or from crypto in the process), it would likely fall under:

**Money-Changing and Remittance Businesses Order, 2011:** Requiring a license for money services businesses.

**Token Issuers/Brokers (if deemed Securities):** If a virtual asset is structured in a way that it constitutes a "security" under Brunei law (e.g., representing ownership, debt, or a share in profits), then activities related to its issuance, trading, or dealing would be subject to:

**Securities Market Order, 2001 (and subsequent amendments):** This would require licenses for capital market services.

**Capital Requirements:** Vary significantly depending on the type of license (e.g., banking license requires substantial capital, while a money-changing/remittance license has lower, but still significant, capital requirements).

**AML/KYC Requirements:** Brunei has robust Anti-Money Laundering and Counter-Financing of Terrorism (AML/CFT) laws. Any financial institution, or entity performing financial activities, would be subject to strict AML/CFT obligations, including:

Customer Due Diligence (CDD) / Know Your Customer (KYC) procedures.

Suspicious Transaction Reporting (STR) to the Financial Intelligence Unit (FIU) under the AMBD.

Compliance with the Anti-Money Laundering Order, 2000 and the Anti-Terrorism Order, 2011 (and subsequent updates).

**Local Presence:** Yes, generally, a local physical presence and local management/board members are required for licensed financial institutions in Brunei.

**Pre-application discussions:** With AMBD to understand requirements and feasibility.

**Submission of detailed business plan:** Including operational model, risk management, governance, IT systems, and financial projections.

**Fit and Proper Test:** For directors, shareholders, and key management.

**Meeting Capital and other prudential requirements.**

**Ongoing supervision and compliance reporting.**

**Conservative Approach:** Brunei's regulators are generally conservative. Operating in an unregulated space with high risk, without specific guidance from AMBD, carries significant legal and reputational risks.

Brunei has already integrated virtual assets into existing regulatory frameworks with a measured, consumer-protection-first approach, rather than merely considering future regulations based on international standards.

**Legal Advice:** It is absolutely essential to seek local legal counsel in Brunei to assess the specific nature of your proposed virtual asset activities and determine if any existing financial regulations might apply.

Autoriti Monetari Brunei Darussalam (AMBD) Official Website: This is the primary source for all financial regulations and official statements.

Look for sections on "Legislation," "Financial Stability," "Prudential Regulations," and "Consumer Information" for official circulars or warnings.

Key Legislation (available on AMBD website, usually under 'Legislation' or 'Acts').

**AMBD Order, 2010:** Establishes the central bank and its powers.

**Banking Order, 2006:** Regulates banking business.

**Securities Market Order, 2001 (and relevant subsidiary legislation):** Regulates capital market activities.

**Anti-Money Laundering Order, 2000 (and subsequent amendments/regulations):** Outlines AML/CFT obligations.

**Anti-Terrorism Order, 2011 (and subsequent amendments/regulations):** Outlines CFT obligations.

**Shares or debentures** of a corporation or an unincorporated body.

**Units in a collective investment scheme** (like mutual funds or unit trusts).

**Derivatives** (e.g., options, futures, contracts for differences related to securities).

**Interests in a partnership or limited liability partnership** where the investors do not have day-to-day control over the management of the business.

**Any right, option or interest** in respect of any of the above.

An **investment of money or assets**.

In a **common enterprise** (e.g., the token issuer's project).

With an **expectation of profit**.

Primarily derived from the **managerial or entrepreneurial efforts of others** (the issuer or third parties).

And embodies the characteristics of an instrument already defined as a "security" in the SMO.

**Investment Tokens (Security Tokens):** Tokens that represent:

**Equity:** Entitlement to a share in profits, voting rights, or ownership in the underlying entity (similar to shares).

**Debt:** A claim on future income or principal repayment (similar to debentures or bonds).

**Units in a Collective Investment Scheme:** Tokens that pool investor funds for investment purposes, managed by a third party, with investors expecting returns from that management.

**Tokens providing rights to future profits or revenue streams** from a specific project or enterprise.

**Tokens that derive their value from an underlying asset** and offer an investment return to holders, especially if the asset's management is external to the token holder.

**Utility Tokens (Conditional):** While often designed to provide access to a product or service, a utility token *can* be deemed a security if:

It is marketed with an emphasis on its investment potential rather than its utility.

Its value is primarily speculative, derived from the efforts of others, and not immediate consumption.

The underlying product/service is not yet functional or is indefinitely delayed, making the token primarily an investment vehicle.

**Payment/Currency Tokens (Generally Not Securities):** Tokens designed primarily as a medium of exchange (e.g., Bitcoin, stablecoins) are generally not considered securities, unless they are structured to provide investment returns, or represent a claim on a pooled fund of assets designed for investment purposes. However, they might fall under other regulations, such as those related to anti-money laundering (AML) and counter-financing of terrorism (CFT) or e-money.

**Prospectus Requirement:** Generally, an issuer wishing to offer securities to the public in Brunei must:

Prepare and lodge a **prospectus** with the BDCB.

Obtain **approval from the BDCB** for the offer document.

Ensure the prospectus contains all material information necessary for investors to make an informed decision.

**Exemptions:** The SMO provides for certain exemptions from the prospectus requirement, which typically include:

**Small Offers:** Offers made to a limited number of persons or for a limited amount of capital.

**Private Placements:** Offers made only to specific sophisticated or institutional investors (e.g., high-net-worth individuals, accredited investors, financial institutions).

**Offers to Existing Shareholders:** Offers to current shareholders on a pro-rata basis.

Offers of certain types of government securities.

The specific conditions for these exemptions would be detailed in the SMO and its subsidiary regulations.

**Licensed Trading Platforms:** Any platform facilitating the secondary trading of such tokens must be licensed as a "stock market" or "approved exchange" under the SMO by the BDCB. This requires adherence to rules on market integrity, surveillance, investor protection, and operational resilience.

**Licensed Intermediaries:** Entities or individuals involved in facilitating trades (e.g., brokers, dealers) would need to hold the appropriate Capital Markets Services Licence (CMSL) from the BDCB for dealing in securities.

**Market Conduct Rules:** All trading activities would be subject to market conduct rules to prevent market manipulation, insider trading, and other illicit activities.

**AML/CFT Compliance:** Any platform or intermediary dealing with crypto assets, regardless of their security classification, must comply with Brunei's anti-money laundering and counter-financing of terrorism regulations, including customer due diligence (CDD) and suspicious transaction reporting (STR) obligations.

**Market Size:** Brunei's financial market is relatively small, and the volume of crypto-related activities, particularly large-scale ICOs or STOs targeting Bruneian investors, has been limited.

**Regulatory Approach:** The BDCB generally adopts a cautious and guidance-oriented approach, often issuing warnings to the public about the risks associated with investing in unregulated products or with entities not licensed in Brunei.

**Proactive Warnings:** The BDCB has frequently issued public warnings about unlicensed financial service providers and investment schemes, including those involving virtual assets. These warnings serve to educate the public and deter illegal activities before they escalate to formal enforcement actions.

Issue a **cease and desist order**.

Place the entity on its **Investor Alert List**.

Impose **administrative penalties or fines**.

Refer the matter for **criminal prosecution** under the SMO if severe breaches are found.

**Brunei Darussalam Central Bank (BDCB) Official Website:**

This is the primary source for official announcements, publications, and regulatory frameworks. Look under sections like "Financial Regulation," "Publications," or "Consumer Information" for relevant guidance or warnings.

This legislation can typically be found on the **Attorney General's Chambers (AGC) Brunei Darussalam** website, which hosts Brunei's consolidated laws.

`https://www.agc.gov.bn/` (You would need to navigate or search for the "Securities Markets Order, 2015" within their legal database.)

The BDCB regularly updates a list of unlicensed entities that are involved in potentially illegal financial activities. While not specific to crypto securities classification, it reflects the BDCB's enforcement posture against unregulated investment schemes.

**Approach:** **Restrictive / Effectively Unregulated (leading to a de facto ban on local operations).** Brunei has not established a comprehensive or partial regulatory framework specifically for cryptocurrencies. Instead, it operates on a principle of caution, primarily driven by concerns around consumer protection, financial stability, and anti-money laundering/combating the financing of terrorism (AML/CFT) risks.

The central bank of Brunei Darussalam is the Brunei Darussalam Central Bank (BDCB), not Bank Negara Brunei Darussalam (BNBD). BDCB was established on 1 January 2021, taking over the functions of the Autoriti Monetari Brunei Darussalam (AMBD).

The official central bank of Brunei is Brunei Darussalam Central Bank (BDCB), and its website is bdcb.gov.bn; Bank Negara Brunei Darussalam (BNBD) is not the current name or website.

**AML/CFT Order, 2011 (as amended):** This order provides the framework for combating money laundering and terrorist financing. While not specific to crypto, any financial institution or Designated Non-Financial Businesses and Professions (DNFBPs) dealing with funds (even if derived from virtual assets) would fall under its purview if they operate within the traditional financial system.

**Financial Services Act, 2006 (as amended):** This act governs the licensing and regulation of financial institutions. Without specific inclusion of crypto-related activities, crypto-related businesses generally do not fall under its licensing scope.

**No Official Recognition or Licensing:** There are no specific regulations that recognize or license cryptocurrency trading platforms or exchanges in Brunei. This means no entity can legally set up and operate a cryptocurrency exchange or offer related services (like wallet custody or initial coin offerings) within Brunei's jurisdiction.

**Public Advisories:** The predecessor to BNBD, AMBD, had issued public advisories in the past cautioning the public about the risks associated with virtual currencies, highlighting their speculative nature, lack of regulation, and potential for fraud and money laundering. These advisories reflect the continued cautious stance of the Bruneian authorities.

**No Local Regulated Exchanges:** Consequently, there are no legally established or licensed cryptocurrency exchanges operating within Brunei Darussalam. Residents seeking to trade cryptocurrencies may access international platforms, but they do so entirely at their own risk and outside of any local regulatory oversight or consumer protection.

**Banks' Stance:** Local commercial banks and financial institutions are generally cautious and may be reluctant to process transactions identified as related to cryptocurrencies, aligning with the broader restrictive stance from the central bank. This can make it difficult for individuals to fund or withdraw from international crypto platforms through local banking channels.