PANews reported on April 1 that according to Cointelegraph, Vanuatu has passed laws to regulate digital assets and provide a licensing system for crypto companies that want to operate in the Pacific island nation, which a government regulatory adviser called "very strict." The local parliament passed the Virtual Asset Service Provider Act on March 26, giving the Vanuatu Financial Services Commission (VFSC) crypto licensing rights and the right to enforce the Financial Action Task Force (FATF)'s anti-money laundering, anti-terrorist financing and travel rule standards on crypto companies. Under these laws, the VFSC has extensive investigative and law enforcement powers and stipulates fines of up to 250 million vatu (about 2 million US dollars) and up to 30 years in prison.
The law establishes a licensing and reporting framework for exchanges, NFT marketplaces, crypto custody service providers, and initial coin offerings. Notably, the law allows banks to obtain licenses to provide crypto trading and custody services. The VFSC said that while stablecoins, tokenized securities, and central bank digital currencies "may have some similarities with virtual assets in practice," the legislation does not affect them. The legislation also allows the VFSC Commissioner to create a sandbox that allows approved companies to provide a variety of crypto services for a period of one year, which is renewable.
In a March 29 statement, the regulator said that after years of “assessing the risks associated with virtual assets,” it had developed the legislative framework and that these laws would “unlock numerous opportunities” for Vanuatu and improve financial inclusion by allowing for regulated services for crypto cross-border payments.
