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Vanuatu Prepares to Implement Cryptocurrency Legislation This September
The Pacific island nation of Vanuatu plans to pass a bill on digital asset and service providers in September. Branan Karae, Commissioner of the Vanuatu Financial Services Commission (VFSC), announced this at a symposium on digital assets organized by the country’s financial regulator on June 27. The bill is expected to be promulgated during the first week of Parliament.
Loretta Joseph, VFSC policy advisor and speaker at the conference, said the bill has been in the works for several years but has been delayed by multiple cabinet changes. The bill, first introduced in 2020, would establish licensing and registration requirements for virtual asset service providers (VASPs), allowing them to legally operate within the nation.
Joseph explained that the bill will help Vanuatu meet the standards set by the Financial Action Task Force (FATF). The FATF requires countries to assess and mitigate risks associated with cryptocurrency service providers and businesses. “The FATF calls on countries to have legislation on virtual assets. No country in the world can ignore it,” Joseph said.
The proposed act includes five license classes, covering service providers exchange virtual assets and fiat currencies and those that offer cryptocurrency custody, among other functions.
The VFSC will monitor all VASPs to ensure compliance with anti-money laundering and counter-terrorist financing laws. The Commissioner will have the power to veto licences and appoint inspectors to ensure conformity .
Launch of Fintech Sandbox
The law also introduces a “Fintech Sandbox Utility,” which allows companies to initially operate for 12 months without a license. The law requires anyone conducting VASP activities to be licensed, with penalties including fines of 25 million Vanuatu vatus ($207,700) or 15 years in prison. Companies can face fines of up to $2.1 million.
Vanuatulocated in the South Pacific Ocean and composed of 13 main islands, it had a gross domestic product of $1.1 trillion in 2022, according to the World Bank. The economy is based primarily on agriculture, with 80% of the population engaged in agricultural activities.
According to the U.S. Department of State, it is also considered a tax haven and an international financial center. The country is home to approximately 2,300 registered institutions offering offshore banking, legal, accounting, insurance, and trust services.
The Pacific island nation of Vanuatu plans to pass a digital assets and service providers bill in September, Branan Karae, commissioner of the Vanuatu Financial Services Commission (VFSC), announced at a digital assets symposium hosted by the country’s financial regulator on June 27. The bill is expected to be enacted during the first week of parliament.
Loretta Joseph, a policy advisor for the VFSC and a speaker at the conference, said the bill has been in the works for several years but has been delayed by multiple government changes. The bill, first introduced in 2020, would establish licensing and registration requirements for virtual asset service providers (VASPs), allowing them to legally operate within the country.
Joseph explained that the bill will help Vanuatu meet the standards set by the Financial Action Task Force (FATF). The FATF requires countries to assess and mitigate risks associated with cryptocurrency service providers and activities. “The FATF requires countries to have legislation on virtual assets. No country in the world can ignore that,” Joseph said.
The proposed act includes five licensing classes, covering service providers exchange virtual assets and fiat currencies and those that offer cryptocurrency custody, among other functions.
The VFSC will monitor all VASPs to ensure compliance with anti-money laundering and anti-terrorism laws. The Commissioner will have the authority to veto licenses and appoint inspectors to ensure conformity .
Fintech Sandbox Launch
The law also introduces a “Fintech Sandbox Utility,” which allows companies to initially operate for 12 months without a license. The law requires anyone conducting VASP activities to be licensed, with penalties including fines of 25 million Vanuatu vatus ($207,700) or 15 years in prison. Companies can face fines of up to $2.1 million.
Vanuatulocated in the South Pacific Ocean and composed of 13 main islands, had a gross domestic product of $1.1 trillion in 2022, according to the World Bank. The economy is based primarily on agriculture, with 80% of the population engaged in agricultural activities.
According to the U.S. Department of State, it is also considered a tax haven and an international financial center. The country is home to approximately 2,300 registered institutions offering offshore banking, legal, accounting, insurance, and trust services.