Vanuatu Financial Services Commission reports passage of Virtual Asset Service Providers Act establishing a licensing and oversight framework for virtual assets

The Vanuatu Financial Services Commission (VFSC) announced that Vanuatu’s Parliament has passed the Virtual Asset Service Providers Act, creating a legal framework for licensing and regulating Virtual Asset Service Providers and related activities such as initial token offerings and a fintech sandbox utility. VFSC will regulate the virtual asset industry, with the framework aimed at supporting the development of a domestic virtual asset exchange and custodial industry alongside consumer protection and operational integrity requirements. The Act defines virtual assets as digital representations of value that may be traded and used as a medium of exchange, unit of account or store of value, while excluding digital representations of fiat currency, securities and national digital currencies including central bank digital currencies. It is positioned as aligning with international standards including those of the Financial Action Task Force (FATF), the Asia Pacific Group on Money Laundering, the International Organisation of Securities Commissions (IOSCO), the OECD and the EU, including compliance with FATF Recommendation 16 through implementation of the travel rule and provisions to support regulatory cooperation and information exchange. VFSC also reiterated that virtual assets and cryptocurrencies are not legal tender in Vanuatu and cautioned that investments are not covered by statutory compensation arrangements, indicating they are intended only for sophisticated and professional investor categories.