FameEX Hot Topics | Vanuatu Anticipates Passing Long-Awaited Crypto Bill in September

The Pacific Island nation of Vanuatu anticipates enacting a long-awaited digital asset and service provider bill by September. The bill has been ready for several years but faced delays due to multiple cabinet changes, according to VFSC policy consultant Loretta Joseph. VFSC Commissioner Branan Karae announced at a digital assets symposium on June 27 that the bill is expected to be passed during the first week of Parliament.

The bill, initially introduced in 2020, aims to establish licensing and registration requirements for virtual asset service providers (VASPs) in Vanuatu, enabling them to operate legally for the first time. Joseph emphasized that the legislation would help Vanuatu meet the standards set by the Financial Action Task Force (FATF), which mandates countries to assess and mitigate risks associated with crypto service providers and activities. “The FATF is calling on countries to have legislation around virtual assets. No country in the world can ignore this,” Joseph stated. 

Under the proposed act, five license classes will cover service providers offering exchanges between virtual assets and fiat currencies, crypto custody, and other functions. The VFSC will monitor all VASP activities to ensure compliance with Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) laws.

The VFSC Commissioner will have the authority to veto licenses and appoint inspectors to ensure licensed VASPs comply with the Act. Additionally, the bill includes a "Fintech Sandbox Utility," allowing companies to operate for 12 months without a license initially.

The act requires any person conducting VASP activities to be licensed, with penalties for non-compliance including fines up to 25 million Vanuatu vatus ($207.7 million) or imprisonment for 15 years. Corporations can be fined up to $2.1 million.

Joseph noted that smaller nations like Vanuatu need mechanisms to “bring economic prosperity,” suggesting that the bill could position the country as an international financial center. “These jurisdictions, which become offshore financial centers, play a very important role in economic traffic and moving money around,” she said. The enactment of this bill marks a significant step for Vanuatu in regulating digital assets, ensuring compliance with international standards, and fostering economic growth through the establishment of a legal framework for virtual asset services.

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