Seychelles to scrutinise cryptocurrency space, decide to licence or prohibit industry

Several international investigations in cryptocurrency trading platforms scams have been traced back to Seychelles. (forextime.com, Flickr) Photo License: CC BY 2.0

(Seychelles News Agency) - The Seychelles Financial Services Authority and the Ministry of Finance are working on a policy to either prohibit or licence the incorporation of cryptocurrency trading platforms as International Business Companies (IBC) registered in the island nation.

Several international investigations in cryptocurrency trading platforms scams have been traced back to Seychelles. The most recent incident has been the OneCoin case, in which an investigation is ongoing in multiple transactions involving the transfer of 230,000 Bitcoins. The transaction also included cash and property worth over $10 billion in what's become known as the OneCoin pyramid scheme.

The director at the Anti-Money Laundering and Terrorist Financing (AML/CFT) section, Randolf Samson, told reporters on Wednesday that although many of these cryptocurrency platforms set up as International Business Companies (IBC) in Seychelles, the actual activity happens online and often outside of the island nation's jurisdiction.

"There are many incorporated companies that are facilitating that activity. The reason why they are use Seychelles is because we do not have a framework that would otherwise discourage them. Cryptocurrency developed quite fast but the laws of many countries are not up to date with this type of activity," he said.

Samson added that "at this point FSA together with the Ministry of Finance and other authorities are working on a policy that will have to be approved by the government so as to see if Seychelles will prohibit the activity or to license it."

"A risk assessment needs to be carried out to look at the pros and cons. If Seychelles stands to benefit from the activity, we will license it. However, if it brings too much risks and bad reputations, we will simply prohibit the activity. The problem with cryptocurrency, the way things are going, you will have to take a stance as it is popular among a growing number of people and other countries are taking options to regulate this activity," said Samson.

He outlined that once a company is incorporated in a country's jurisdiction, the said country has a responsibility to ensure that the companies, and legal persons are not involved in illicit activities, like money laundering.

The introduction of such a policy will also put Seychelles, an archipelago in the western Indian Ocean, in line with recent Financial Action Task Force (FATF) amendments made in June 2020. In the amendments made jurisdictions that actually host any companies or people doing trading in virtual assets, or virtual asset service providers as they are called, have to either license or register these entities.