The Virtual Asset & Initial Token Offering Services Act 2021 (“Act”) is the enactment to govern virtual asset service providers and issuance of token offerings. The Act came into force from 7 February 2022.
The Objective
The Act aims at providing a comprehensive legislative framework to regulate the new and developing business activities of virtual assets and initial token offerings. This framework comes into a step to meet the standards set by the Financial Action Task Force for managing, mitigating and preventing any anti-money laundering and countering the financing of terrorism (“AML/CFT”) risks associated with virtual assets.
The Regulator
Under the Act, the Financial Services Commission (“FSC”) will be responsible for regulating and supervising virtual asset service providers and issuers of initial token offerings. The FSC shall supervise and oversee the following:
- Licensing virtual asset service providers.
- Registering issuers of initial token offerings.
- Determining whether virtual asset service providers and issuers of initial token offerings are, for AML/CFT purposes, complying with the Financial Intelligence and Anti-Money Laundering Act, the Financial Services Act and the United Nations (Financial Prohibition, Arms Embargo and Travel Ban) Act 2019.
Definition of Virtual Assets
The Act defines “Virtual Asset” as follows:
“A Virtual Asset is any digital representation of value that can be digitally traded, transferred or used for payment. It does not include the digital representation of fiat currencies.”.
Furthermore, the Act also contains a few transitional provisions which now provide that a ‘security' under the Securities Act no longer includes a 'virtual token'.
Offences under the Act
In order to protect the rights of clients of virtual assets and virtual tokens, and to ensure AML/CFT compliance, the Act states that it will be a financial offence to:
- Carry out business activities as a virtual asset service provider without being licensed.
- Carry out business activities as an issuer of initial token offerings without being registered.
As per Sections 7(2) and 23(2) of the Act, any person found in contravention be liable to a fine not exceeding five million Mauritius Rupees and imprisonment for a term not exceeding 10 years.
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