Seychelles in consultation phase for proposed law on regulating virtual assets and VASPs

The popular symbol of the virtual asset, the Bitcoin. (Onov3056/Wikimedia) Photo License: CC-BY-SA 4.0

(Seychelles News Agency) - Seychelles’ National Anti-Money Laundering and Countering the Financing of Terrorism Committee (NAC) is conducting a consultation phase for the proposed framework for the regulation of virtual assets (VA) and virtual asset service providers (VASPs).

As a member of NAC, the Financial Services Authority (FSA) has taken a lead with regards to this project and its implementation.

The CEO of FSA, Randolf Samson, said in a NAC meeting on Tuesday that “this consultative process is part of a wider aim of the Seychelles government to have a policy position and a law in place which will regulate this sector in Seychelles.”

The policy and law have yet to be approved, as it is still in its consultative phase, however, Samson reiterated that their goal is to have these measures in place by March this year.

“The end of March is a significant date for us, Seychelles is presently under assessment from the [international body called the] Financial Action Task Force (FATF) and to be able to get an upgrade on recommendation 15 of the FATF which relates to new technologies then we have to submit a request by the end of March so that it can be considered in the September meeting of the FATF. Otherwise, we have to wait until next year,” said Samson.

He noted that there are a lot of risks that are associated with the virtual assets sector. These assets include cryptocurrencies like Bitcoin, Litecoin, Ethereum or Dogecoin. However, he added that the FSA has found that there is a lot of interest in Seychelles at the level of the FATF but also other partner countries whereby they feel that “Seychelles is a significant player with regards to virtual assets and virtual assets service providers. And with this law, the different authorities such as the Financial Service Authority, the Central Bank and the Police will have enough baggage to be able to deal with these activities because it does present a lot of risk.”

Samson clarified that while this sector entertains a high level of risk, there are also benefits for the country.

“We foresee that this framework will also provide an opportunity for innovation in Seychelles, it will also enable us to better embrace technology because these activities are heavily technology based.”

Samson explained that the policy is still being finalised and that there are still some decisions that need to be clarified.

“There are other factors to consider as well such as taxation; to have these companies registered in Seychelles there might be the need to incentivise them being here, so the government is discussing whether a preferential tax rate will be given or perhaps the normal tax rate will be applied to these licensees.”

FSA has found that there are around 80 companies or entities that might fall within the definition of VA and VASP, and it anticipates that these companies will need to apply for a license under the new law if the law is actually put in place.

“We’re giving a transitional period of about six months and if during that time they do not apply for a license then the FSA and the other authorities will need to start taking action,” said Samson.

The consultative meeting held was an opportunity for the NAC to present the policy and draft laws to the different stakeholders involved, which is a process that already began in December.

“From the initial comments that we are getting from the consultative session, a few recurring themes relate for example to the fees that are being charged for a license under this law. Another issue comes with regards to the substance requirements, these are certain requirements you need to have for this licence. For example, you need to have two directors, you have to do board meetings in Seychelles,” explained Samson.