- Vanuatu passes first comprehensive crypto regulation law in the Pacific region
- VFSC gains authority for licensing, enforcement; follows FATF AML/CTF standards
- Law covers exchanges/custody/ICOs, excludes stablecoins, includes sandbox
Vanuatu has officially passed a new act to regulate crypto firms. This legislative action makes it the latest island in the Pacific region to introduce such comprehensive oversight measures specifically for the digital asset industry.
Under the new law, the VFSC is empowered to issue crypto business licenses. It can also conduct investigations into licensed entities and enforce penalties for non-compliance.
The legislation includes potentially harsh penalties for serious violations; specified fines can reach up to 250 million vatu (approximately $2 million USD), and certain offenses could carry prison sentences of up to 30 years.
Loretta Joseph, a key policy consultant who advised the VFSC on this legislation, stated the measures were designed, in part, to prevent Vanuatu from becoming an unregulated haven for illicit crypto activity. She drew comparisons to the situation surrounding the collapse of FTX in 2022, which highlighted regulatory gaps in some jurisdictions.
Joseph highlighted that smaller jurisdictions like Vanuatu are often targeted by individuals or entities seeking areas with minimal regulatory oversight. This underscores the importance of implementing strong, clear financial regulations in the region, she argued.
What Services Does the New Vanuatu Law Cover?
The new law creates a comprehensive licensing and reporting framework applicable to various Virtual Asset Service Providers (VASPs). This explicitly includes crypto exchanges, digital asset custody providers, and platforms that facilitate initial coin offerings (ICOs).
Additionally, the VFSC will gain the ability to establish and operate a regulatory sandbox. This program allows approved crypto companies to operate legally under a temporary license for up to one year, with potential renewal possibilities. The sandbox initiative aims to foster responsible financial innovation while maintaining strict regulatory oversight by the VFSC.
Related: Crypto Laws in U.S. Could Pass by Q2 2025 – Congressman French Hill
Vanuatu’s move to regulate crypto coincides with a growing global trend. An increasing number of smaller jurisdictions are taking proactive legislative or regulatory steps to manage the unique risks and potential economic opportunities presented by the rapidly evolving digital asset sector.
Officials hope that with robust enforcement measures and clearer regulatory guidelines now in place, Vanuatu can position itself as a responsible leader for crypto regulation within the Pacific region.
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