The Virtual Asset Service Provider License under Mauritius’ Groundbreaking Legislation

Mauritius, positioning itself at the forefront of global regulatory advancements, has introduced the Virtual Asset and Initial Token Offerings Services Act 2021.

At the heart of this legislation is the requirement for virtual asset service providers to obtain a license from the Financial Services Commission (FSC).

This article unravels the intricacies of the licensing process and associated obligations outlined in the Act.

Licensing Mandate and Penalties

Mandatory Licensing

Section 7 of the Act unequivocally states that no person shall engage in the business activities of a virtual asset service provider in or from Mauritius unless they hold a valid virtual asset service provider’s license.

Legal Consequences

Violating the licensing requirement is a serious offense. Section 7(2) outlines the penalties, with individuals facing fines not exceeding 5 million rupees and imprisonment for a term not exceeding 10 years upon conviction.

Application for License

Eligibility and Documentation

Section 8 establishes the eligibility criteria for obtaining a license. Notably, only companies are eligible to apply for a virtual asset service provider’s license.

The application process mandates the submission of a comprehensive set of documents, including the certificate of incorporation, a business plan, details of management arrangements, anti-money laundering policies, customer due diligence information, and a written authorization from directors.

Regulatory Approvals

Certain entities, such as banks or holders of licenses issued under other relevant Acts, may apply for a virtual asset service provider license with the written approval of the central bank. This provision underscores the Act’s adaptability to accommodate diverse financial entities.

Commission’s Discretion

The Commission may set up technical committees, ensuring a thorough examination of applications. The Commission reserves the right to request additional information and verify the authenticity of submitted data.

Withdrawal of Application

Applicants retain the right to withdraw their application at any stage before a determination is made, provided they provide written notice to the Commission.

License Determination and Criteria

Granting or Rejecting Applications

Section 9 empowers the Commission to either grant or reject an application based on the fulfillment of specific criteria.

Key Criteria for Approval

The Commission must be satisfied that the application complies with the Act, meets the prescribed criteria, and ensures that the applicant possesses the necessary resources, infrastructure, and competence to carry out virtual asset service provider activities.

Fit and Proper Evaluation

The applicant and its controllers, beneficial owners, associates, and officers are subject to a “fit and proper” evaluation. This evaluation considers the integrity and capability of individuals involved in the virtual asset service provider’s operations.

Financial Soundness

The Commission assesses the financial soundness and stability of the applicant, ensuring adherence to prudential standards and the absence of potential harm to the financial services industry.

Operational Requirements and Transparency:

Physical Presence

Virtual asset service providers are required to maintain a physical office in Mauritius. The Act provides factors for the Commission to consider in determining compliance with this requirement, including the location of strategic decision-making and the residence of key personnel.

Register of Virtual Asset Service Providers

Section 11 mandates the Commission to establish and maintain a Register of Virtual Asset Service Providers, providing transparency by publishing essential information on its website.

Conclusion

The Virtual Asset Service Provider License under Mauritius’ Virtual Asset and Initial Token Offerings Services Act 2021 not only mandates compliance but reflects the nation’s commitment to fostering a secure and transparent digital financial ecosystem.

As virtual assets continue to shape the future of finance, the Act and its licensing framework set a robust foundation for responsible innovation, ensuring the industry’s growth aligns with regulatory standards and investor protection.