Cryptocurrency Legislation in Mauritius in 2024
Mauritius, as of 2024, presents a robust and evolving legislative framework for cryptocurrency, reflecting its commitment to regulate the burgeoning digital asset market while fostering innovation in financial services.
Regulatory Developments
Mauritius introduced significant changes to its cryptocurrency regulation with the Virtual Asset & Initial Token Offering Services Act 2021. The Act, passed into law by the National Assembly, offers a comprehensive legislative framework to regulate virtual assets and initial token offerings. This framework aligns with international Financial Action Task Force (FATF) standards, focusing on managing and mitigating risks associated with anti-money laundering and countering the financing of terrorism (AML/CFT) in relation to these emerging business practices.
Role of the Financial Services Commission
The Financial Services Commission (FSC) is tasked with the regulation and supervision of virtual asset service providers and issuers of initial token offerings. Under the Act, the FSC is responsible for:
Licensing virtual asset service providers.
Registering issuers of initial token offerings.
Ensuring compliance with the Financial Intelligence and Anti-Money Laundering Act, the Financial Services Act, and other relevant regulations.
Notably, carrying out business activities as a virtual asset service provider or an issuer of initial token offerings without appropriate licensing or registration is a financial crime offense under the new Act.
Expansion of the Regulatory Framework
Initially, Mauritius’ regulatory framework for digital assets was confined to guidelines focusing on custodian services and digital assets categorized as ‘securities’ and ‘security tokens.’ The new Act expands this framework, encompassing a broader range of activities under a comprehensive definition of ‘virtual asset,’ adopted from FATF guidelines. This expansion reflects Mauritius’ proactive approach to regulating a wider spectrum of digital asset activities.
Promoting Financial Innovation
The Mauritian government has demonstrated its commitment to fostering financial innovation. Key initiatives include:
Establishing open labs for banking and payment solutions by the Bank of Mauritius (BoM) and the FSC.
Creating a FinTech Innovation Hub to encourage entrepreneurship in the FinTech sector.
Introducing the new Securities Bill to reinforce the legal structure of the FinTech sector, particularly concerning tokens and virtual assets with underlying securities.
Enacting new legislation for virtual assets.
Piloting a Central Bank Digital Currency, known as the Digital Rupee, by the BoM.
These initiatives aim to enhance Mauritius’ position as a hub for financial innovation and technology, supporting the growth of the FinTech sector.
Custodian Services for Digital Assets
In June 2020, Mauritius released new guidelines for the licensing of security token trading, emphasizing the regulation of custodian services for digital assets. Key provisions included cybersecurity standards, capital requirements, corporate governance norms, and operational mandates for businesses offering custodian services. The guidelines also highlighted the absence of statutory compensation arrangements for investors in Mauritius, underlining the need for investor awareness and caution in the digital asset space.
In summary, as of 2024, Mauritius exhibits a comprehensive approach towards cryptocurrency regulation, balancing the need for stringent AML/CFT compliance with the promotion of innovation in the financial services sector. The country’s legislative efforts demonstrate its commitment to creating a regulated yet dynamic environment for the burgeoning digital asset market.
About The Author
