Vanuatu Launches a New Crypto Regulation

Vanuatu has enacted a law to regulate digital assets and establish a licensing system for crypto companies aiming to operate in the Pacific island nation, described as “very strict” by a government regulatory advisor.

Passed on March 26, the Virtual Asset Service Providers Act empowers the Vanuatu Financial Services Commission (VFSC) to issue crypto licenses and enforce Financial Action Task Force (FATF) standards for anti-money laundering, counter-terrorism financing, and travel rules.

The VFSC is granted broad investigative and enforcement powers under this law, with penalties including fines up to 250 million vatu (about $2 million) and imprisonment of up to 30 years.

The legislation outlines a licensing and reporting framework for exchanges, NFT marketplaces, crypto custody providers, and initial token offerings. Banks are also allowed to obtain licenses for crypto trading and custody services.

The VFSC clarified that the law does not affect stablecoins, tokenized securities, and central bank digital currencies, despite their similarities to virtual assets.