Custodial wallet / SaaS in Saint Kitts and Nevis

Requirement: Any entity engaging in a "virtual assets business" must be licensed by the Financial Services Regulatory Commission (FSRC). "Custody of virtual assets or instruments enabling control over virtual assets" is specifically defined as a virtual assets business.

Section 3: Defines "virtual assets business" to include "custody of virtual assets or instruments enabling control over virtual assets."

Section 4: Mandates that "A person shall not carry on a virtual assets business in or from Saint Christopher and Nevis unless that person holds a licence granted by the Commission under this Act."

Section 17(1): "A licensee shall hold virtual assets belonging to its customers in separate accounts from the licensee’s own assets."

Section 17(2): "A licensee shall designate customer property as such and ensure that customer property is not commingled with the licensee’s own property."

Section 17(3): Further states that customer virtual assets "shall not be made available to creditors of the licensee, nor shall it be subject to liquidation, bankruptcy, or any similar proceedings against the licensee."

Section 18(1): "A licensee shall, at all times, maintain insurance coverage or a bond for the full market value of the virtual assets under its custody or control."

Section 18(2): "The Commission may specify the requirements for the insurance coverage or bond, including the minimum amount and terms of coverage."

Section 19(1): "A licensee shall implement appropriate security measures to protect virtual assets under its custody or control from theft, loss or unauthorised access."

Section 19(2): "The licensee shall establish and maintain a risk management framework that includes measures to identify, assess, monitor, and mitigate risks relating to the safekeeping of virtual assets."

Section 19(3): Specifies that the security measures must cover "custody of private keys" and "access control," strongly implying secure offline storage for private keys.

Virtual Assets Business Act, 2020 (Part II - Licensing and Regulation of Virtual Assets Business)

Application Process: Applicants must submit an application to the FSRC, including:

Robust anti-money laundering (AML) and combating the financing of terrorism (CFT) policies and procedures.

Companies providing any service in Saint Kitts and Nevis must still be incorporated or registered under the Companies Act or other relevant corporate legislation.

For purely digital asset custody where no fiat is involved, there is no specific license.

If the custody service extends to holding or managing fiat currency on behalf of clients, it might again fall under the Money Services Business Act or other financial services legislation, potentially requiring an MSB license or a trust license if structured as such.

Requirements: Comprehensive Know Your Customer (KYC) procedures, transaction monitoring, suspicious activity reporting (SARs), appointment of an AML Compliance Officer, staff training, and record-keeping.

Crucial. Regardless of a specific crypto license, any entity operating in St. Kitts and Nevis that handles funds (fiat or virtual assets) and is involved in financial transactions is expected to comply with robust Anti-Money Laundering (AML) and Counter-Terrorist Financing (CFT) regulations.