Vanuatu Passes Crypto Regulation and Licensing Bill, But “Very Strict”

 according to Cointelegraph, Vanuatu has regulated digital assets through legislation and has established a licensing system for crypto companies wishing to operate in the Pacific island nation, described by a government regulatory advisor as "very strict." The local parliament passed the Virtual Asset Service Providers Act on March 26, granting the Vanuatu Financial Services Commission (VFSC) the power to license crypto companies and to enforce the Financial Action Task Force (FATF) anti-money laundering, counter-terrorism financing, and travel rule standards. Under these laws, the VFSC has broad investigative and enforcement powers, with fines of up to 250 million Vatu (approximately 2 million USD) and a maximum of 30 years in prison.

The law establishes a licensing and reporting framework for exchanges, NFT markets, crypto custody service providers, and initial token offerings. It is worth noting that the law allows banks to be licensed to provide crypto trading and custody services. The VFSC stated that while stablecoins, tokenized securities, and central bank digital currencies "may have some similarities in practice with virtual assets," this legislation does not affect them. The legislation also allows the VFSC Commissioner to create a sandbox, allowing approved companies to offer a variety of crypto services for a period of one year, renewable.

In a statement on March 29, the regulatory agency said that after years of "assessing the risks associated with virtual assets," it has developed a legislative framework that will bring "numerous opportunities" to Vanuatu and improve financial inclusion by allowing regulated services for crypto cross-border payments.