Crypto steady as BVI premier released on bond following drug arrest
Updated
Bitcoin and other cryptocurrencies have avoided getting caught up in political turmoil in the British Virgin Islands (BVI), as the islands' leader faces cocaine smuggling and money laundering charges in the US, and the UK government contemplates direct rule of the overseas territory.
Premier Andrew Fahie was caught in a US Drug Enforcement Agency (DEA) sting at a Miami airport last week and arrested. On Wednesday in Miami, a judge ruled that Fahie could be released on a $500,000 bond while awaiting trial, Reuters and other media outlets reported.
BVI has become a large tax haven for crypto investors and developers, who welcome the unregulated status of digital coins and the territory’s tax-neutral status, and absence of withholding tax, capital gains taxes, income tax, and corporate taxes.
The prosecutor had sought to keep Fahie behind bars in the US until a trial, but Judge Alicia Otazo Reyes of the US District Court for the Southern District of Florida, ruled that he does not pose a flight risk beause he has ties to the country. His two daughters live in the US.
Fahie had sought to be released on grounds that he held diplomatic immunity, but the US government issued a statement saying that he is not recognized as a head of state.
The BVI port authority CEO and her son were also arrested last week. And the Speaker of the House of Assembly resigned Tuesday – at the request of the new acting premier – as he was caught in the political fallout.
Fahie’s arrest came the same day that a UK commission of inquiry report found an “appalling” failing of governance in the BVI. The Fahie government had faced wide-scale allegations of corruption.
Andrew Fahie, BVI premier (Photo: Government of BVI)The premier’s arrest and report are not linked, but they have combined to cause political mayhem and potential constitutional disruption.
Based on the report’s recommendation, the UK government voiced plans to impose direct rule. BVI residents protested Monday as British Foreign Office Minister Amanda Milling met with BVI politicians to discuss such a possibility.
But Andrew Rankin, the UK’s government representative for BVI, signalled that it would be business as usual for crypto and conventional finance despite Fahie’s arrest and the release of a British commission of inquiry report into the region’s governance. Rankin issued a news release Friday saying that Fahie’s arrest and the report should not be conflated with the finance sector.
Fahie, also the region’s finance minister before his arrest, has indicated a willingness to discuss a BVI digital coin in the past. His government and digital currency platform operator LifeLabs announced plans in 2019 to develop a rapid cash system in the event of an emergency.
University of Toronto finance professor Andreas Park, who specializes in cryptocurrency, welcomed the possibility of British direct rule of BVI.
“The British government recently announced that it wants to make the UK a global cryptoasset tech hub,” Park told Capital.com. “With such a positive attitude, taking over the BVI’s crypto strategy would be a good thing.”
