According to Cointelegraph, PANews reported on April 1st that Vanuatu has passed a law to regulate digital assets and provide a licensing system for crypto companies wishing to operate in the Pacific island nation, which a government regulatory advisor described as "very strict". The local parliament passed the Virtual Asset Service Providers Act on March 26th, granting the Vanuatu Financial Services Commission (VFSC) crypto licensing rights and the authority to enforce Financial Action Task Force (FATF) anti-money laundering, counter-terrorist financing, and travel rule standards. Under these laws, VFSC has broad investigative and enforcement powers, with fines up to 250 million vatu (approximately $2 million) and imprisonment of up to 30 years.
The law establishes a licensing and reporting framework for exchanges, Non-Fungible Token markets, crypto custody service providers, and initial token offerings. Notably, the law allows banks to obtain licenses to provide crypto trading and custody services. The VFSC stated that while stablecoins, tokenized securities, and central bank digital currencies "may have some similarities to virtual assets in practice", the legislation does not affect them. The legislation also allows VFSC commissioners to create a sandbox, permitting approved companies to provide various crypto services for one year, with the possibility of renewal.
The regulatory body stated in a declaration on March 29th that after years of "assessing risks related to virtual assets", it developed a legislative framework that will bring "numerous opportunities" to Vanuatu and improve financial inclusivity by allowing regulated services for crypto cross-border payments.
