Apply for a VASP Licence
Mauritius, an island nation in the Indian Ocean, has been proactive in positioning itself as a forward-thinking financial hub. With the rise of blockchain technology and cryptocurrencies, Mauritius has recognised the need to regulate virtual assets (VAs) and virtual asset service providers (VASPs) to protect consumers and maintain financial stability. Let’s delve into the Virtual Assets Service Provider (VASP) licence in Mauritius, exploring its regulatory framework, requirements, and implications.
Benefits of the VASP Licence
The VASP licence in Mauritius offers several benefits to both service providers and the broader financial ecosystem:
Enhanced Credibility
A VASP licence enhances the credibility of service providers, bringing comfort to customers and investors that the entity operates within a regulated and secure framework.
Investor Confidence
Regulation instills confidence among investors, fostering a safer and more attractive environment for investment in virtual assets.
Innovation and Growth
The regulatory framework encourages innovation by providing clear guidelines and support for the development of new financial products and services.
Regulatory Framework
The regulatory framework for VASPs in Mauritius is primarily governed by the Financial Services Commission (FSC) under the Financial Services Act and the Virtual Asset and Initial Token Offering Services Act 2021 (VAITOS Act). The VAITOS Act provides a comprehensive structure for the regulation of VASPs, ensuring that the sector operates with transparency, security, and integrity.
Objectives of the VAITOS Act
The VAITOS Act aims to:
- Foster the development of a secure and stable virtual assets market
- Prevent money laundering and terrorist financing.
- Protect consumers and investors.
- Enhance the reputation of Mauritius as a trusted financial hub.
Scope of the VAITOS Act
The Act covers various aspects of virtual assets, including:
- Virtual Asset Services: Encompassing activities such as exchange between virtual assets and fiat currencies, exchange between virtual assets, transfer of virtual assets, safekeeping and administration of virtual assets, and participation in and provision of financial services related to the sale of a virtual asset.
- Initial Token Offerings (ITOs): Regulating the issuance of new tokens to the public.
Understanding the different licences
VASP - Broker / Dealer - Class M
- Definition and Scope: Virtual asset broker-dealers are entities that mediate transactions involving digital assets, serving as intermediaries between buyers and sellers in virtual asset markets.
- Functions: A broker-dealer licence holder facilitates trading, provides liquidity, execute orders, and offers related services such as market analysis.
- Market Dynamics: The proliferation of cryptocurrencies, digital tokens, and other virtual assets has fuelled the demand for brokerage services, underscoring the significance of virtual asset broker-dealer in the global financial ecosystem.
VASP - Wallet Services - Class O
- Definition and Scope: A VASP Wallet Services Licence authorises a licensee to provide digital asset wallet services.
- Functions: The wallet services licence holder allows the licensee to facilitate the transfer of digital assets between wallets, management of private keys, and creation and management of user accounts.
- Transfer Services: The transfer services may include intra-wallet and inter-wallet services which allow seamless transfers within the same platform as well as transfers to external wallets “across external platforms”.
VASP - Custodian - Class R
- VASP Custodian licensees bear the critical responsibility of ensuring the safekeeping of virtual assets. This involves implementing robust security measures to protect these assets from theft, fraud, and loss.
- Beyond safekeeping, Class R licensees are also responsible for the administration of virtual assets or instruments enabling control over these assets. Administration duties encompass a wide range of activities designed to ensure the efficient and secure management of virtual assets.
VASP - Advisory Services - Class I
A Class I (VASP – Advisory Services) licence is essential for businesses who wish to engage in and provide financial advisory services related to the issuance, offer, and sale of virtual assets (VAs). This licence is granted by the FSC of Mauritius to ensure that advisory services in the digital asset space meet stringent standards of integrity, professionalism, and compliance.
These licensees are responsible for providing comprehensive support to issuers and investors, encompassing strategic planning, regulatory compliance, investment analysis, marketing, and post-issuance services. By fulfilling these responsibilities, these licensees play a vital role in fostering a secure, transparent, and efficient market for virtual assets. This licence not only protects investors and maintains market integrity but also promotes innovation and growth in the digital asset sector.
VA - Market Place - Class S
Virtual asset exchanges, whether centralised or decentralised, play a crucial role in the digital economy by facilitating the trading of virtual assets (VAs) for fiat currency or other virtual assets. In Mauritius, these exchanges must apply for a Class S (Virtual Asset – Market Place) licence, ensuring they operate within a regulated framework that promotes transparency, security, and compliance with financial regulations.
Licensing Criteria
Obtaining a VASP licence in Mauritius involves a thorough process to ensure compliance with regulatory standards. The key requirements include:
- Application Form: Applicants must submit a completed application form to the FSC through a licensed and regulated management company such as Blue Azurite.
- Business Plan: A detailed business plan outlining the nature of the virtual asset services to be provided, market analysis, target audience, and projected financials.
- Fit and Proper Criteria: Directors and senior management must meet the ‘fit and proper’ criteria, demonstrating integrity, competence, and financial soundness.
- Capital Requirements: Minimum capital requirements must be met to ensure financial stability and operational viability.
- Compliance and Risk Management: Robust compliance and risk management frameworks must be established to address AML/CFT risks.
- Technology and Security: Adequate technological infrastructure and security measures to safeguard against cyber threats and ensure the integrity of transactions.
Ongoing Obligations
Licensed VASPs are subject to ongoing obligations to maintain their licence, including:
- Reporting: Regular submission of financial reports, audit reports, and other relevant documents to the FSC.
- AML/CFT Compliance: Continuous compliance with anti-money laundering and combating the financing of terrorism regulations.
- Consumer Protection: Ensuring transparency, fair practices, and the protection of consumer rights.
- Audit and Inspection: Subject to periodic audits and inspections by the FSC to ensure compliance with regulatory requirements.
Summing up
The Virtual Assets Service Provider licence in Mauritius represents a significant step towards fostering a secure and transparent virtual assets market. By establishing a comprehensive regulatory framework, Mauritius has positioned itself as a competitive and attractive destination for VASPs. The benefits of the VASP licence, including enhanced credibility, market access, and investor confidence, are substantial. As the virtual assets landscape continues to evolve, Mauritius’ proactive approach to regulation will be crucial in maintaining its status as a leading financial hub.
References
- Financial Services Commission Mauritius website (2021). “Virtual Asset and Initial Token Offering Services Act.“
- Financial Services Commission website (2022) FAQ Fintech Series – Guidance Notes.“
- Financial Services Commission website (2023). “Financial Services Act.
