Seychelles Passes New Legislation to Regulate Virtual Asset Service Providers

A draft bill to regulate virtual asset service providers (VASPs) has been approved by the Seychelles National Assembly. In the nation’s endeavors to strike a balance between innovation and the necessity to stop money laundering and other financial crimes, this new legislation represents a major advancement. The bill guarantees that Seychelles continues to keep a close eye on actions involving virtual assets by adhering to recommendations made by the Financial Action Task Force (FATF).

Key Requirements for VASPs

The new law mandates that VASPs seeking to operate in Seychelles must establish a substantial local presence. This includes having a resident director, a physical office, and a competent staff within the country. According to Finance Minister Naadir Hassan, “For an applicant to qualify for a license, the principal criteria is to demonstrate a substantial presence in Seychelles, such as having a director who is a resident.” The law requires that all records be accessible through the local office, ensuring transparency and accountability.

Entities already regulated by the Seychelles central bank will need additional approval before engaging in virtual asset services. The bill emphasizes that individual applicants will not be considered, narrowing the focus to corporate entities. The Seychelles Financial Services Authority (FSA) will oversee the implementation and enforcement of these regulations.

This legislation not only seeks to foster innovation within the virtual assets space but also aims to mitigate the risks associated with money laundering and other illicit activities. The bill covers a range of services, including wallet providers, virtual asset exchanges, brokering services, and virtual asset investment providers. All these entities will now require a license to operate in Seychelles.

The main goal of the bill, according to Hassan, is to “balance supporting innovation with mitigating money laundering risks” while still abiding by global norms established by the Financial Action Task Force. The measure also contains provisions aimed at informing regulated companies and consumers about potential frauds and the improper use of virtual assets.

Seychelles is establishing a strong foundation for the future of virtual assets in the nation by enacting this legislation in an effort to maintain the innovation and security of its financial sector.