Mauritius is one of the first countries in the Eastern and Southern African region which has taken steps to adopt a comprehensive legislation on virtual assets (VAs) and Initial Token Offerings (ITOs). Virtual assets have dominated the FinTech space in recent years and it was estimated that the cryptocurrency global market rose to an all-time high, reaching an all-time high at $3 Trillion Market Cap. With so many growth opportunities, Mauritius became keen to rein in the benefits of the new and developing business activities of Vas and ITOs to becoming one of the leading regional FinTech hub for Africa.
The rapidly evolving blockchain space have the potential to thoroughly development the financial landscape. However, their global reach, speed, advancement, and most importantly, anonymity also attract many who want to avoid authorities’ scrutiny. By taking measures to curb the possibility of money laundering via new technologies, the Mauritius Anti-Money Laundering and Combatting the Financing of Terrorism and Proliferation (AML/ CFT) Framework had to be enhanced in order to protect the rights and safeguard the public from such adverse financing. This will in turn assist to maintain the international reputation of Mauritius following its removal from the list of jurisdictions under increased monitoring by the Financial Action Task Force (FATF).
The Virtual Asset Act mainly would like to provide a legal framework for business activities related to digital assets in line with the international market. It would also like to meet with the international standards of the Financial Action Task Force by managing, mitigating and preventing money laundering and the financing of terrorism and proliferation risks (AML/ CFT) associated with these emerging business practices. Thus, the Virtual Asset Act introduces the concepts of ‘virtual asset’ and the ‘virtual asset service provider’ into the Mauritian legal landscape and, vests the FSC with the following powers:
- Issue Virtual Assets Service Provider (VASP) licenses;
- Register issuers of initial token offerings; and
- Determine whether VASP and issuers of initial token offerings fully comply with their obligations to combat anti-money laundering and the financing of terrorism and its proliferation.
What is a Virtual Asset and a Digital Token Offering?
A Virtual Asset (VA), according to the VAITOS Act 2021, is a digital representation of value which may be digitally traded or transferred, and may be used for payment or investment purposes, but does not include a digital representation of fiat currencies, securities and other financial assets that fall under the purview of the Securities Act.
A Digital Token Offering denotes an offer by an issuer of an initial token offering to sell a virtual token to the public in exchange for fiat currency or another virtual asset.
|Class M: Virtual Asset Broker-Dealer||Exchange between virtual assets and fiat currencies; or exchange between one or more forms of virtual assets.|
|Class O: Virtual Asset Wallet Services||Transfer of virtual assets.|
|Class R: Virtual Asset Custodian||Safekeeping of virtual assets or instruments enabling control over virtual assets; administration of virtual assets or instruments enabling control over virtual assets.|
|Class I: Virtual Asset Advisory Services||Provision of financial services related to an issuer’s offer and/ or sale of virtual assets.|
|Class S: Virtual Asset Market Place|
Virtual asset exchange is a centralized or decentralized virtual platform, whether in Mauritius or in another jurisdiction which facilitates the exchange of virtual assets for fiat currency or other virtual assets on behalf of third parties for a fee, a commission, a spread or other benefit and which:
The definition of Virtual Asset Exchange also includes the owner or operator of the virtual platform but excludes a platform only providing a forum where sellers and buyers may post bids and offers and a forum where the parties trade in a separate platform or in a peer-to-peer manner.
Who is Regulating the VASP?
The FSC will keep stakeholders and the public informed about possible scams. The FSC’s additional powers and functions include the following:
- Maintaining a register of all VASPs and issuers of ITOs;
- Monitoring their business activities;
- Issuing guidelines to ensure compliance as appropriate;
- Promoting investor education which facilitate innovation;
- Taking any measures with the Bank of Mauritius to ensure the stability of the financial system in Mauritius in respect of its licensees; and
- Carrying out onsite inspections and exchanging information with other supervisory bodies and law enforcement agencies.
If you are running a Virtual Asset business and would like to speak to one of our Mauritius expert advisors, please contact us here.