Vanuatu's Strict Crypto Laws

Vanuatu has passed the Virtual Asset Service Providers Act, establishing a robust regulatory framework for cryptocurrency businesses operating within the nation. This follows years of development and addresses concerns about financial crime.

Stringent Regulations for Crypto Firms

The new law grants the Vanuatu Financial Services Commission (VFSC) broad authority to license and oversee crypto companies. This includes exchanges, NFT marketplaces, custody providers, and ICOs. Penalties for violations are severe, with potential fines up to $2 million and 30 years imprisonment. A regulatory consultant described the legislation as "very stringent," emphasizing a strong stance against fraudulent activities.

Key Features of the New Law:

• Licensing and Reporting Framework: Establishes a comprehensive system for licensing and reporting for various crypto businesses.
• Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) Compliance: Enforces strict AML/CTF measures aligned with Financial Action Task Force (FATF) standards.
• Investigation and Enforcement Powers: Grants the VFSC extensive powers to investigate and enforce compliance.
• Regulatory Sandbox: Allows approved companies to test crypto services in a controlled environment.

The VFSC clarified that stablecoins, tokenized securities, and central bank digital currencies are not explicitly covered under this legislation, although they may share similarities with virtual assets. Notably, the law permits banks to obtain licenses for crypto exchange and custody services.

Preventing Future Crypto Debacles

The government's decision reflects a proactive approach to mitigating risks associated with the crypto industry. The goal is to prevent events like the FTX collapse from occurring within Vanuatu's jurisdiction. The consultant emphasized the country's commitment to responsible regulation, aiming to attract legitimate businesses while deterring fraudulent actors.

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