Tech
Vanuatu Completes Approval of Long-Awaited Cryptocurrency Bill in September
The Pacific island nation of Vanuatu is about to build a significant legislative move. The country wrapped up passage in September of a long-awaited digital assets law to establish licensing of cryptocurrencies and service providers.
Branan Karae, commissioner of the Vanuatu Financial Services Commission (VFSC), mentioned the passage of the bill during his opening remarks at a symposium on digital assets.
Vanuatu Finalizes Passage of Cryptocurrency Bill
In his speech at the conference Karae said on June 27 that the bill is expected to be introduced during the first week of the parliamentary session.
According to Loretta Joseph, a policy advisor at VFSC, the bill has been ready for several years. However, several changes in government have repeatedly delayed its implementation.
Originally introduced in 2020, political instability delayed the bill’s progress, preventing its implementation becoming law until now.
The main objective of the bill is to create a comprehensive framework for licensing and registration virtual asset service providers (VASPs)This regulatory framework will allow them to operate legally in Vanuatu for the first time.
However, the bill also outlines specific licensing and registration requirements that these crypto service providers must meet to operate.
Joseph stressed that the bill would help Vanuatu align with the Financial Action Task Force (FATF) standards. The FATF is an international watchdog that fights money laundering and terrorist financing.
It primarily requires countries to assess and manage risks associated with cryptocurrency service providers and businesses, making this legislative move essential for Vanuatu.
The proposed legislation includes five classes of licenses covering various services. These include exchanges between cryptocurrencies and fiat currenciescryptocurrency custody services and other related service providers.
Meanwhile, the VFSC will oversee the activities of VASPs to ensure compliance with Counter-Terrorism Financing (CTF) and Anti-Money Laundering (AML) laws. The VFSC commissioner will have substantial authority, including the power to veto licenses and appoint inspectors to ensure compliance with the law.
Main features of the new Vanuatu bill
A notable feature of the next bill is the introduction of a Fintech Sandbox Utilitywhich allows companies seeking licenses to operate for 12 months without an initial license.
This sandbox approach encourages innovation and provides new operators with a platform to establish themselves before fully complying with licensing requirements.
Furthermore, the bill outlines severe sanctions for individuals and companies carrying out VASP activities without a license.
Individuals who violate the regulations could face fines of up to 25 million Vanuatu vatus ($207,700) or a prison sentence of up to 15 years. For companies, the fine amount can be up to $2.1 million.
Additionally, Joseph highlighted the broader economic implications of the bill, particularly for smaller nations like Vanuatu. He highlighted the need for innovative approaches to drive economic growth, noting that Vanuatu, as an island nation, cannot rely on traditional manufacturing industries.
However, by establishing itself as an international financial center through progressive legislation, Vanuatu could attract significant economic activity and investment.
The country, located in the South Pacific Ocean, is made up of 13 main islands. Second according to the World Bank, it had a gross domestic product (GDP) of $1.1 billion in 2022.
Disclaimer: The views expressed in this article do not constitute financial advice. We encourage readers to conduct their own research and determine their risk tolerance before making any financial decisions. Cryptocurrency is a highly volatile and high-risk asset class.
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