The Seychelles National Assembly has approved a draft bill to regulate virtual asset service providers (VASPs). The bill requires license-seeking VASPs to establish a substantial presence in Seychelles, such as having a resident director and an office with competent staff. The law aims to balance innovation with anti-money laundering efforts, adhering to Financial Action Task Force (FATF) recommendations.
Combating Risks of Virtual Assets
The Seychelles National Assembly recently approved a draft bill to regulate virtual asset service providers (VASPs). According to a report, the bill, presented by Finance Minister Naadir Hassan, aims to complement Seychelles’ strategy for combating risks associated with virtual assets and VASPs.
Once enacted, the measure will ensure that VASPs operate responsibly and prevent bad actors from using virtual assets for nefarious activities. Before the bill’s passage, Hassan disclosed that the law would require license-seeking VASPs to 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, such as having a director who is a resident. They must have an office in Seychelles with enough competent workers and that all records are accessible via that office,” Hasan reportedly said.
Balancing Innovation Against Money Laundering Risks
He indicated, however, that individuals seeking licenses will not be entertained, while entities regulated by the Seychelles central bank will need approval from the bank. Furthermore, applicants must undergo an evaluation process before operating as VASPs.
According to the finance minister, operating or prospective wallet service providers, virtual asset exchanges, virtual exchanges, brokering and virtual asset investment providers will all require a license.
The Seychelles minister insisted the proposed law aims to balance supporting innovation with mitigating money laundering risks. He added that Seychelles seeks to achieve this while adhering to Financial Action Task Force (FATF) recommendations.
The Seychelles Financial Services Authority (FSA) will be responsible for implementing the law, according to the report. In addition to outlining the regulatory framework for governing VASPs, the bill reportedly calls for educating consumers and regulated entities about scams and the inappropriate use of virtual assets.
