Seychelles, which accounted for over half of the total funding to Web3 startups Africa in 2023, is taking measures to protect consumers and comply with global regulations when it comes to cryptocurrencies.
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This is after the Seychelles National Assembly unanimously approved a new bill to regulate virtual asset providers, local reports indicate.
According to the country’s Minister for Finance, Economic Planning and Trade, Naadir Hassan, the objective of the bill is to complement a national strategy to combat financial risk associated with virtual assets and virtual asset service providers (VASPs).
According to local reports, the bill has many links with the National Anti-Money Laundering and Countering the Financing of Terrorism Committee (NAC) and related regulations. It will ensure virtual assets and VASPs can function in a responsible manner and reduce the risk of wrong utilisation by illegal actors.
The minister said that to qualify, VASPs, in or outside Seychelles, have to set up a company under the Seychelles Companies Act or the International Business Companies Act (IBC).
“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,” Hassan said.
The bill, which comes after the regulator warned against various entities claiming affiliation with the country, outlaws individuals from applying for a licence and only registered entities regulated by the Central Bank of Seychelles have to get approval from the bank. The applicant will also have to go through a risk evaluation to be able to function as a VASP.
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Hassan emphasized that activities that will need a licence include:
- Wallet service providers
- Virtual asset exchanges
- Virtual exchanges
- Virtual asset brokering, and
- Virtual asset investment providers
“For an applicant to get a licence, there will be well detailed and strict criteria they will have to follow and meet for them to address identified vulnerability directly linked to the services they offer,” he added.
“I want to point out that the proposed bill for virtual asset service providers is balancing innovation with risk mitigation and the measures against money laundering. Seychelles has ensured that it has taken all measures recommended by the Financial Action Task Force (FATF), by emphasizing risk management.”
The Financial Services Authority (FSA) has been designated as the regulator responsible for the implementation of the law.
Provision has been made to sensitize local consumers and the regulated entities about scams and wrongful use of virtual assets. The bill also ensures that sufficient protection is in place for consumers who become victims of illegal activities.
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