Vanuatu has implemented strict regulations governing digital assets, establishing a licensing system for cryptocurrency businesses operating in the Pacific island nation. The Virtual Asset Service Providers Act, passed by Vanuatu’s parliament on March 26th, empowers the Vanuatu Financial Services Commission (VFSC) to issue crypto licenses and enforce anti-money laundering, anti-terrorism financing, and travel rule standards set forth by the Financial Action Task Force (FATF). This legislation grants the VFSC considerable investigative and enforcement authority, with potential penalties ranging up to 250 million Vatu ($2 million), and a maximum imprisonment of 30 years. The law establishes licensing and reporting requirements for exchanges, NFT marketplaces, crypto custody service providers, and initial coin offerings. Notably, it allows banks to obtain licenses for offering crypto trading and custody services.
The VFSC clarified that while stablecoins, tokenized securities, and central bank digital currencies share characteristics with virtual assets in practice, the legislation does not directly affect them. Furthermore, the law permits the VFSC commissioner to create a sandbox environment, enabling approved companies to offer various crypto services for one year, with the possibility of renewal.