According to PANews, Vanuatu has enacted legislation to regulate digital assets and establish a licensing system for cryptocurrency companies wishing to operate in the Pacific island nation. A government regulatory advisor described the new law as 'very strict.' On March 26, the local parliament passed the Virtual Asset Service Providers Act, granting the Vanuatu Financial Services Commission (VFSC) the authority to issue crypto licenses and enforce anti-money laundering, anti-terrorism financing, and travel rule standards set by the Financial Action Task Force (FATF).
Under this legislation, the VFSC has extensive investigative and enforcement powers, with penalties reaching up to 250 million Vatu (approximately $2 million) and imprisonment for up to 30 years. The law establishes a licensing and reporting framework for exchanges, NFT marketplaces, crypto custody service providers, and initial coin offerings. Notably, it allows banks to obtain licenses to offer crypto trading and custody services.
The VFSC clarified that while stablecoins, tokenized securities, and central bank digital currencies may have similarities with virtual assets in practice, the legislation does not affect them. Additionally, the law permits the VFSC commissioner to create a sandbox environment, enabling approved companies to offer various crypto services for one year, with the possibility of renewal.
In a statement on March 29, the regulatory body emphasized that after years of assessing risks associated with virtual assets, it has developed a legislative framework that will bring numerous opportunities to Vanuatu. By allowing regulated services for crypto cross-border payments, the legislation aims to enhance financial inclusion.
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