Vanuatu Prepares to Pass Landmark Digital Asset Bill, Aims to Boost International Financial Status
Summary:
Vanuatu, a Pacific Island nation, plans to pass a long-awaited bill on digital assets and service providers as early as September. The 2020-introduced bill is set to legalize and regulate virtual asset service providers (VASPs), bringing the nation closer to meeting the standards of the intergovernmental Financial Action Task Force. The VFSC will monitor these entities, enforcing Anti-Money Laundering and Counter-Terrorism financing laws. Non-compliance could result in hefty penalties or imprisonment. The proposed legislation is seen as a significant step towards boosting Vanuatu's role as an international financial center.
Vanuatu, a country in the Pacific Islands, anticipates passing a bill on digital assets and service providers as early as September. The Vanuatu Financial Services Commission (VFSC) Commissioner Branan Karae unveiled this plan on June 27 during a digital assets symposium hosted by the country's financial authority. Loretta Joseph, a VFSC policy consultant and speaker at the event, shared with Cointelegraph that though the bill had long been prepared, recurring cabinet reshuffles had repeatedly postponed its implementation. The bill, initially introduced in 2020, will set the parameters for licensing and registration of virtual asset service providers (VASPs) in the nation, legalizing their operations therein. According to Joseph, this bill will align Vanuatu with the standards of the Financial Action Task Force (FATF) - an intergovernmental entity obliging countries to identify and neutralize risks tied to cryptocurrency-related services and activities. As Joseph put it, "No country can ignore the FATF's call for legislation around virtual assets". The proposed law envisages five types of licenses covering various service providers, from virtual-to-fiat currency exchangers to crypto custody providers, among others. The VFSC will supervise all VASPs and check their compliance with Anti-Money Laundering and Counter-Terrorism financing laws. The regulator's Commissioner will have the authority to reject licenses and assign an inspector to ensure that licensed VASPs operate in accordance with the Act. A "Fintech Sandbox Utility" will also be established, allowing companies to operate license-free for 12 months when seeking licensure. Anyone engaging in VASP activities must be licensed or face severe penalties, including hefty fines or up to 15 years' imprisonment, with corporations also subject to fines. Joseph highlighted that this bill could boost the economy of smaller nations like Vanuatu, advancing their quest for "economic prosperity" and bolstering their profile as an international financial center. Vanuatu, composed of 13 key islands in the South Pacific Ocean, had a GDP of $1.1 billion in 2022, as per World Bank data. Its economy revolves around agriculture, with 80% of the population participating in farming activities. Known as a tax haven and international financial center according to the U.S. State Department, the country hosts around 2,300 registered institutions offering offshore banking, legal, accounting, insurance, and trust services.
Published At
6/27/2024 9:03:00 AM
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