Vanuatu has adopted a bill to introduce a regulatory regime for digital assets, including a license and reporting framework for exchanges, Non-fungible token (NFT) marketplaces, custody suppliers of digital assets and initial coin offers (ICOS).
South Pacific Island Nation’s parliament passed “”Virtual Asset Service Provider (VASP) ACT“On March 26. Among other measures, the framework Vanuatu appointed Financial Services Commission (VFSC) as a license authority, with powers to enforce Financial Action Task Force’s (FATF) Anti-Tage Wash, financing and travel Railway financing and travel Riders for terrorism at digital asset companies.
According to the new law, the supervisory authority received improved investigative and enforcement powers, with potential penalties of up to $ 250 million ($ 2 million) and up to ten years in prison for criminals.
“Economically, VASP ACT establishes a stable regulatory framework for digital business transactions,” VFSC said in EN March 29 statementadds that the framework was developed after years with “assessment of the risks associated with virtual assets.”
According to the regulator “, the new law opens many opportunities for Vanuatu, both economically and socially, while ensuring that international standards are followed.”
Vasp -law’s important points
During the new framework, digital assets were defined as “digital representations of value that can be traded and function as a exchange mediuman account account or store with value. ”
The legislation also allows VFSC’s Commissioner to create a “fintech Sandbox Utility” – a service that uses innovative technology to improve, change or improve finance companies– To allow approved companies to offer a range of services, for example digital assetsguardians, advisory or exchange services for one year – which can be extended at the end of the period.
However, the VASP Act does not cover digital representations of fiat currencies, securities and national digital currencies, including Central Bank digital currency (CBDC), although “in practice they can share some similarities to virtual assets,” VFSC said.
In addition, the regulator emphasized that digital assets are still not Legal tender in the country and can be a risk for investors.
“Virtual assets and crypto courses are not protected by any statutory compensation arrangements in Vanuatu,” said VFSC, warn that it “does not recommend them for retail investors without a thorough understanding of the associated risks.”
Loretta Joseph, who consulted with the government and the regulator about the framework, praised VASP acts as “a landmark legislation that marks a bold step forward to embrace the future of digital finance.”
She suggested that the passage of the law proves that “emerging markets can lead the way in the design of legislation that not only includes digital assets but does so while it carefully reduces the risks.”
“It is a real proof of how a small East can move faster than many of its larger neighbors – given the purpose, agility and foresight,” Joseph said.
Watch: Reggie Middleton at Defi, Booms/Busts & Crypto Regulation
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