Vanuatu Sets Sail on the Digital Currency Sea: A Trailblazing Legislation for Crypto Assets and Services Anchoring in 2024

Vanuatu, a cluster of islands in the South Pacific Ocean, is on the brink of adopting a pioneering digital asset and service provider bill, set for September 2024. This legislative move aims to create a robust legal framework for digital assets and their service providers, heralding a significant development in the nation’s financial landscape.

This bill, in discussion for numerous years, faced postponements due to changes within the cabinet. Nevertheless, Branan Karae, the Commissioner of the Vanuatu Financial Services Commission (VFSC), confirmed at a recent digital assets symposium that the bill is slated for enactment in the upcoming Parliament session in September.

At the same conference, VFSC policy consultant Loretta Joseph elucidated that the legislation would align Vanuatu with the Financial Action Task Force (FATF) standards, which necessitate that countries evaluate and mitigate the risks related to cryptocurrency service providers and operations. This bill will establish vital licensing and registration for virtual asset service providers (VASPs), authenticating their operations within Vanuatu.

The anticipated act is expected to introduce five distinct classes of licenses for service providers dealing with exchanges between virtual assets and fiat currencies, and those offering crypto custody services, among others. The VFSC will oversee all VASPs to ensure compliance with Anti-Money Laundering and Counter-Terrorism financing laws. Furthermore, the VFSC Commissioner will retain authority to deny licenses and designate inspectors to monitor compliance.

Severe penalties have been outlined for non-compliance, including fines up to 25 million Vanuatu vatus (approximately USD207.500) or up to 15 years of imprisonment for individuals, while corporations may face fines up to 2.1 million.

Joseph highlighted the bill’s potential to enhance economic prospects for smaller nations like Vanuatu by cementing their status as international financial centres, integral to the global economic system and capital flow.

Currently, Vanuatu’s economy heavily relies on agriculture, with about 80% of its population engaged in it. Despite this, the country is also recognized as an offshore financial centre, offering extensive services in offshore banking, legal, accounting, insurance, and trusts across approximately 2,300 registered institutions.

Moreover, the nation is carving a niche as a burgeoning crypto-hub. Satoshi Island, a 32-million-square-foot island owned by Satoshi Island Holdings Limited, aims to transform into a community for cryptocurrency professionals and enthusiasts, aspiring to be the global crypto capital. Developmental milestones include the purchase of the island, securing construction permits, and the development of an NFT marketplace. Over 50,000 NFT visa applications for permanent residency have been filed. A ‘private opening’ of the island is planned for later this year, with NFT homeowners expected to start residing there by early 2025.

References

• Vanuatu expects to pass long-awaited crypto bill in September
• Vanuatu’s economy and registration of institutions
• Satoshi Island: The New Crypto-Hub
• Why is Vanuatu Citizenship the Ultimate Choice for Crypto Investors?
• Vanuatu Regulator Brings Brokers to The “Shore”. In Person.