The Pacific island nation of Vanuatu is set to enact its long-awaited Digital Assets and Service Providers Bill as early as September.
Vanuatu Financial Services Commission (VFSC) Commissioner Branan Karae said in his opening remarks at the Digital Asset Symposium hosted by Vanuatu’s financial regulator on June 27 that the bill is expected to be enacted in the first week of parliament.
VFSC policy consultant Loretta Joseph, who attended the meeting, told Cointelegraph that the bill has been in the works for several years but has been repeatedly delayed due to multiple cabinet changes.
The bill, first introduced in 2020, sets licensing and registration requirements for domestic virtual asset service providers (VASPs), allowing them to operate legally within the island nation for the first time.
Joseph said the bill would help Vanuatu move closer to the standards set by the Financial Action Task Force (FATF), an intergovernmental body. FATF requires countries to assess and mitigate risks associated with cryptocurrency service providers and activities.
“FATF is calling on countries to enact laws on virtual assets. No country in the world can ignore this,” Joseph said.
5 Cryptocurrency Licenses in Vanuatu
According to the proposed legislation, there are five classes of licenses covering service providers that provide a means of exchange between virtual assets and fiat currency, as well as service providers that provide cryptocurrency custody services.
VFSC monitors the activities of all VASPs and ensures compliance with anti-money laundering and counter-terrorist financing laws.
The regulator’s commissioners have the power to deny licenses and can also appoint inspectors to ensure licensed VASPs operate in compliance with the law.
There will also be a “fintech sandbox utility”. This allows companies seeking a license to operate without one for 12 months.
The law requires anyone carrying out VASP activities to obtain a license with penalties including a fine of $207.7 million (25 million Vanuatu vatu) or 15 years in prison, or $2.1 million for a corporation. You may be charged.
Joseph said many small countries, including Vanuatu, need a way to “bring economic prosperity” and noted that the bill could solidify Vanuatu as an international financial center.
“They can’t build cars or build car manufacturing facilities because they’re islands.”
“These jurisdictions, being offshore financial centres, play a very important role in economic traffic and movement of funds,” she said.
Related: DFX Labs meets Hong Kong’s AML requirements for cryptocurrency licensing.
Vanuatu, located in the South Pacific and made up of 13 major 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 considered a tax haven and an international financial center, according to the U.S. State Department.
The country has approximately 2,300 registered institutions providing offshore banking, legal, accounting, insurance and trust services.
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