Seychelles Takes a Bold Step: New Regulations for Virtual Asset Service Providers!

The Seychelles National Assembly has officially approved a groundbreaking draft bill aimed at regulating Virtual Asset Service Providers (VASPs). This legislation is designed to ensure that VASPs maintain a substantial presence in Seychelles, which includes having a resident director and a competent office staff.

Combating Risks of Virtual Assets

The new law is a crucial part of Seychelles’ strategy to combat the risks associated with virtual assets and VASPs. It mandates that VASPs operate responsibly, helping to prevent misuse of virtual assets for illicit activities. Finance Minister Naadir Hassan emphasized that license-seeking VASPs must establish companies under the Companies Act or the International Business Companies Act.

“For an applicant to qualify for a licence, the principal criteria is to demonstrate a substantial presence in Seychelles,” Hassan stated.

Balancing Innovation Against Money Laundering Risks

Interestingly, the law will not entertain individual license applications; only entities regulated by the Seychelles central bank will be considered. Applicants will undergo an in-depth evaluation process before they can operate as VASPs. This includes wallet service providers, virtual asset exchanges, and investment providers, all of which will now require a license.

The primary goal of this legislation is to strike a balance between fostering innovation and mitigating the risks of money laundering. The Seychelles government aims to align with the recommendations of the Financial Action Task Force (FATF) while promoting a secure environment for virtual asset operations.

The Seychelles Financial Services Authority (FSA) will oversee the implementation of this law, which also focuses on educating consumers about scams and the responsible use of virtual assets.

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