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The Seychelles National Assembly has passed new legislation aimed at regulating virtual asset service providers (VASPs) within the country. This move, spearheaded by Finance Minister Naadir Hassan, is part of Seychelles’ broader initiative to manage the risks associated with virtual assets while ensuring that VASPs operate under a legal and ethical framework.
Under the new law, any entity wishing to operate as a VASP in Seychelles must establish a company in accordance with the Companies Act or the International Business Companies Act. This requirement is designed to ensure that VASPs maintain a substantial presence in the country.
Key Requirements for VASP Licensing
To qualify for a license, applicants must demonstrate a significant presence in Seychelles. This includes having a resident director, an office staffed with qualified personnel, and ensuring that all operational records are accessible through this local office.
“For an applicant to qualify for a license, the main criteria is to demonstrate a substantial presence in Seychelles, such as having a director who is a resident,” Finance Minister Hassan explained. “They must have an office in Seychelles with enough competent workers and that all records are accessible via that office.”
Hassan also emphasized that individual applicants will not be eligible for licensing, and entities already regulated by the Seychelles central bank will require additional approval from the bank.
Thorough Evaluation Process
Prospective VASPs, including wallet service providers, virtual asset exchanges, and investment providers, will undergo a rigorous evaluation process before being granted a license. This legislation aims to strike a balance between fostering innovation in the virtual asset sector and preventing illicit activities such as money laundering.
The regulations align with international standards, particularly the recommendations of the Financial Action Task Force (FATF), and will be enforced by the Seychelles Financial Services Authority (FSA).
Consumer and Business Education
In addition to regulatory measures, the bill includes provisions for educating consumers and businesses about the potential risks associated with virtual assets, such as scams and misuse. This educational component reinforces Seychelles’ proactive stance in regulating digital finance, ensuring the country’s financial system is safeguarded while supporting technological advancement.
Global Regulatory Context: EU’s MiCA Regulation
The Seychelles’ approach to regulating VASPs aligns with global trends, such as the European Union’s Markets in Crypto-Assets (MiCA) framework. Approved by the European Parliament in April 2023, MiCA aims to create uniformity in crypto regulation across EU member states. The framework includes stringent requirements for stablecoin issuers, with full compliance expected by the end of 2024. Notably, Circle, the issuer of USDC, became the first global stablecoin firm to achieve MiCA compliance on July 1.
The passage of this bill positions Seychelles as a forward-thinking regulator in the rapidly evolving digital finance landscape, reinforcing its commitment to both innovation and financial security.
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