British Indian Ocean Territory

The regulatory status of cryptocurrency in the British Indian Ocean Territory (BIOT) is characterized by a complete absence of specific local legislation, rendering the activity 'Allowed-UnRegulated'. As a British Overseas Territory with no permanent civilian population, BIOT functions primarily as a military base (Diego Garcia). Consequently, the BIOT Administration has not enacted a domestic financial services framework or a specific Virtual Asset Service Provider (VASP) regime. Under the principles of English law, which applies where local ordinances are silent, the buying, selling, and holding of cryptocurrencies are not prohibited. Therefore, military personnel and contractors residing in the territory are legally permitted to trade crypto assets, typically utilizing offshore exchanges and foreign bank accounts.

Despite the lack of local regulation, the territory is not a regulatory black hole regarding financial crime. The UK's international obligations and sanctions regimes are extended to BIOT via Orders in Council. This means that the UK's Office of Financial Sanctions Implementation (OFSI) rules, which explicitly cover crypto assets (e.g., freezing Tether addresses linked to sanctioned entities), are enforceable within the territory. However, there is no local financial regulator, central bank, or commercial banking sector to enforce day-to-day compliance or licensing for retail trading platforms.

A unique aspect of BIOT's relationship with the crypto industry is the '.io' country-code top-level domain (ccTLD). While widely used by cryptocurrency startups and exchanges (e.g., formerly FTX.io), the management of this domain is a technical and commercial matter separate from the territory's financial regulation. The BIOT Administration receives revenue from the domain registry but does not regulate the financial activities of the companies using these domains. Thus, a crypto exchange using a '.io' domain is not licensed or supervised by BIOT authorities.

The legal landscape is poised for significant change following the UK government's agreement in late 2024/early 2025 to transfer sovereignty of the Chagos Archipelago to Mauritius. While the treaty allows the UK to retain jurisdiction over Diego Garcia for an initial period of 99 years, the outer islands will fall under Mauritian law. Mauritius has a proactive regulatory regime for cryptocurrencies under its 'Virtual Asset and Initial Token Offering Services Act 2021'. Once the transfer is fully implemented, the regulatory status for the wider territory may shift from 'Unregulated' to 'Allowed-Regulated' under Mauritian jurisdiction, while Diego Garcia will likely remain under the current UK-aligned unregulated status unless specific ordinances are introduced.