Vanuatu is poised to finally pass its digital asset and service provider bill, a development anticipated by September. Branan Karae, Commissioner of the Vanuatu Financial Services Commission (VFSC), announced this during a digital assets symposium on June 27. According to Karae, the bill is scheduled for enactment in the upcoming parliamentary session’s first week.
Loretta Joseph, a VFSC policy consultant and conference speaker, revealed to Cointelegraph that the bill, prepared since 2020, faced delays due to changes in the cabinet over the years. Once enacted, this legislation will establish licensing and registration prerequisites for virtual asset service providers (VASPs) within Vanuatu, marking their first legal operations within the nation.
Joseph emphasized that the bill’s implementation aligns with standards set by the Financial Action Task Force (FATF), necessitating countries to mitigate risks associated with crypto activities. She underscored, “The FATF mandates nations to establish virtual asset legislation. This is a global imperative.”
The bill outlines five classes of licenses covering VASPs facilitating virtual-to-fiat exchanges, crypto custody, and other related functions. VFSC will oversee and enforce Anti-Money Laundering and Counter-Terrorism Financing laws among all licensed entities. The Commissioner retains authority to reject licenses and appoint inspectors to ensure compliance.
Additionally, the bill includes provisions for a “Fintech Sandbox Utility,” enabling provisional operations for prospective licensees over twelve months. Non-compliance penalties for unauthorized VASP activities include fines up to 25 million Vanuatu vatus ($207,700) or up to 15 years’ imprisonment for individuals, and fines up to $2.1 million for corporations.
Joseph highlighted Vanuatu’s strategic ambition as a potential international financial hub, crucial for smaller nations seeking economic advancement. She emphasized the role of such jurisdictions in facilitating global financial flows.
Vanuatu, consisting of 13 principal islands in the South Pacific Ocean, reported a GDP of $1.1 billion in 2022, primarily driven by agriculture. Recognized as a tax haven and international financial center, it hosts approximately 2,300 registered institutions offering offshore banking, legal, accounting, insurance, and trust services.
In a related development, DFX Labs recently met Hong Kong’s AML requirements for a crypto license, underscoring the evolving regulatory landscape in financial services across different jurisdictions.