Mauritius: Mauritius Passes Virtual Assets and Initial Token Offering Services Act
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The Initial Token and Virtual Asset Offering Services Act of 2021 was signed into law by the National Assembly on December 10 and will come into effect when presidential approval is received. The draft law was opened for industry consultation with final inputs submitted on July 23 and approved by Cabinet at its November 26 meeting.
The purpose of the law is to provide a comprehensive legislative framework to regulate new and developing business activities of virtual assets and initial token offerings. This framework is necessary to meet the Financial Action Task Force international standards for arrangements to manage, mitigate and prevent any anti-money laundering and counter-terrorist financing (AML/CFT) risk associated with these business practices. emerging.
Under the law, the Financial Services Commission (FSC) is responsible for regulating and supervising virtual asset service providers and initial token offering issuers. The law therefore provides that the FSC, among other things, must:
- Licensed virtual asset service providers.
- Register issuers of initial token offerings.
- Determine whether virtual asset service providers and issuers of initial token offerings comply, for AML/CFT purposes, with the Financial Intelligence and Anti-Money Laundering Act, the Services Act Financial and United Nations (Financial Prohibition, Arms Embargo and Travel Ban) Act 2019.
In addition, in order to protect the rights of customers of virtual assets and virtual tokens, and to ensure AML/CFT compliance, it will be a financial crime offense to:
- Conducting business activities as a virtual asset service provider without being properly licensed.
- Conducting business activities as an issuer of initial token offerings without being properly registered.
- Otherwise, be in violation of this new regulatory regime.
The existing digital asset regulatory framework has been adopted in the form of guidelines and regulations, with its scope limited to custodial services and digital assets, such as “securities” and “security tokens” . The new law no longer limits the regulatory framework to these areas but provides for the licensing and supervision of a much wider range of activities under a new comprehensive definition.
Key provisions of the law include the new definition of a “virtual asset”, which was imported from the FATF guidelines, and the transitional provisions which provide that a “security” under securities law does not no longer includes a “virtual token”.
In order to promote innovation in the financial services sector, the Mauritian government announced a series of initiatives in the National Budget 2021-22, as follows:
- First, the Bank of Mauritius (BoM) and the FSC will set up open labs for banking and payment solutions.
- Second, a FinTech innovation hub will be created to foster the culture of entrepreneurship and a one-stop shop will be set up to accept all FinTech-related applications.
- Third, the introduction of the new securities bill will also strengthen the legal structure of the FinTech sector, especially with regard to tokens or virtual assets with underlying securities.
- Fourth, new virtual asset legislation will be enacted.
- Fifth, the BoM will roll out, on a pilot basis, a central bank digital currency, known as the digital rupee.
“The main benefit of the Virtual Assets and Initial Token Offering Services Act is to provide a clear and comprehensive foundation for operators as FinTech grows in Mauritius, while aligning the Mauritian legal framework for regulating this asset class on international standards,” Hafeez said. Toofail, Chief Compliance Officer at Sovereign Consulting Ltd.
“Combined with the new Securities Bill and Securitization Bill announced in the Government Budget Speech 2021/22, it will facilitate virtual asset trading in Mauritius and provide a huge boost to the FinTech industry.”
Originally published on December 16, 2021
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