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The Pacific Island nation of Vanuatu expects to endorse a
digital asset and service provider bill in September. Branan Karae,
Commissioner of the Vanuatu Financial Services Commission (VFSC), announced
this at a digital assets symposium organized by the country’s financial
regulator on June 27. The bill is expected to be enacted during the first week
of Parliament.
New Legislation to Regulate Virtual Asset Services
Loretta Joseph, a VFSC policy consultant and speaker at the
conference, stated that the bill had been ready for several years but faced
delays due to multiple cabinet changes. The bill, first introduced in 2020,
will establish licensing and registration requirements for virtual asset
service providers (VASPs), allowing them to operate legally within the nation.
Joseph explained that the bill will help Vanuatu meet
standards set by the Financial Action Task Force (FATF). The FATF mandates that
countries assess and mitigate risks associated with crypto service providers
and activities. “The FATF is calling on countries to have legislation around
virtual assets. No country in the world can ignore this,” Joseph said.
The proposed act includes five license classes, covering
service providers that exchange virtual assets and fiat currencies and those
offering crypto custody, among other functions.
The VFSC will monitor all VASPs
to ensure adherence to Anti-Money Laundering and Counter-Terrorism financing
laws. The Commissioner will have the authority to veto licenses and appoint
inspectors to ensure compliance.
#Vanuatu is set to pass a long-awaited digital asset and service provider bill in September, establishing licensing and registration requirements for virtual asset service providers (#VASPs) to operate legally. The bill, delayed due to several cabinet changes, aims to meet… pic.twitter.com/sK8l5YswBX
— TOBTC (@_TOBTC) June 27, 2024
Launching Fintech Sandbox
The act also introduces a “Fintech Sandbox Utility,”
allowing companies to operate for 12 months without a license initially. The
act mandates that any person conducting VASP activities must be licensed, with
penalties including fines of 25 million Vanuatu vatus ($207,700) or
imprisonment for 15 years. Corporations can face fines of $2.1 million.
Vanuatu, located in the South Pacific Ocean and consisting
of 13 principal islands, had a gross domestic product of $1.1 billion in 2022,
according to the World Bank. The economy is primarily based on agriculture,
with 80% of the population engaged in agricultural activities.
It is also
regarded as a tax haven and international financial centre, according to the US
State Department. The country hosts around 2,300 registered institutions
offering offshore banking, legal, accounting, insurance, and trust services.
This article was written by Tareq Sikder at www.financemagnates.com.
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