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British Virgin Islands (BVI) Premier Andrew Fahie will plead not guilty to drug smuggling and money laundering charges, his lawyer has indicated.
During a pre-trial hearing in Miami, Florida, Theresa Van Vliet said her client would deny the allegations.
Mr Fahie, 51, was arrested at a Miami airport last week following a US Drug Enforcement Administration (DEA) sting.
The judge ruled he could be released on a $500,000 (£399,732) bond as he awaits trial.
Mr Fahie's arraignment hearing - when he will formally enter a plea - is scheduled for 25 May.
Until then Judge Alicia Otazo-Reyes, of the US District Court for the Southern District of Florida, said he could be released from pre-trial detention but would remain under monitored confinement at the US flat where his two daughters live.
According to Reuters news agency Judge Otazo-Reyes agreed with Mr Fahie's attorney that he would not flee because of his ties to the US.
She said that she believed the bond along with the monitored confinement would "ensure his appearance".
But the Miami Herald reported that Mr Fahie would remain in jail while federal prosecutors appealed against the court's decision.
Mr Fahie was arrested alongside the managing director of the territory's Ports Authority Oleanvine Maynard last Thursday.
The pair, and Ms Maynard's son Kadeem Maynard, are alleged to have agreed to allow an undercover informant to use BVI ports to transport cocaine to the US.
Their detention came a day before an inquiry into the governance of BVI called for it to be returned to direct UK rule amid concerns about corruption.
A government minister has been dispatched to the archipelago in the Caribbean to consider the next steps.