According to ChainCatcher and Cointelegraph, Vanuatu has passed a law to regulate digital assets and provide a licensing system for crypto companies operating in the Pacific island nation, with a government regulatory advisor describing it as "very strict".

The local parliament passed the Virtual Asset Service Providers Act on March 26, 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 on crypto companies. Under these laws, the VFSC has extensive investigative and enforcement powers, with potential 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 the VFSC commissioner 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 March 29 announcement that after years of "assessing risks associated with virtual assets," it developed a legislative framework that will bring "numerous opportunities" to Vanuatu and improve financial inclusion by allowing regulated services for crypto cross-border payments.