The Virtual Asset Service Providers Act, 2024 (VASP Act), which came into force on September 1st, 2024, establishes a comprehensive legal framework to regulate virtual asset service providers (VASPs) and mitigate potential risks such as money laundering and terrorist financing.
Who does the VASP Act apply to?
All domestic and International Business Companies (IBCs) that intend to or are currently providing virtual asset services in or from within Seychelles must be licensed. Additionally, all entities issuing Initial Coin Offerings (ICOs) and Non-Fungible Tokens (NFTs) must be registered.
Licensing is required solely because the entity is registered or incorporated in Seychelles, regardless of where the virtual asset services are conducted.
What activities are allowed under a VASP license?
There are four permissible activities prescribed under the VASP Act:
Virtual Asset Wallet Providers
Virtual Asset Exchange
Virtual Asset Broking
Virtual Asset Investment Providers
And the registration of ICOs and NFTs.
Is there any transition period for licensing and registration under the VASP Act?
Yes, Seychelles entities (i.e., domestic companies or IBCs) operating prior to the commencement of the VASP Act have until December 31, 2024, to submit a VASP application to the Financial Services Authority.
Entities found operating after December 31st, 2024, and failing to submit a complete application will be in breach of the VASP Act and subject to enforcement action, including but not limited to striking off the name of the IBC or domestic company from the register, imposition of fines/ penalties, and relevant court actions.
What are the licensing criteria and obligations?
The VASP Act contains several licensing criteria, including capital, solvency, insurance requirements, cybersecurity protocols, prudential and market conduct standards, audit obligations, and fit and proper assessments for directors and principal officers.
Additionally, the VASP Act introduces substance requirements that licensed VASPs must meet to provide their services in or from Seychelles (e.g., having a resident director and offices in Seychelles). The Act also mandates that all licensed VASPs comply with the provisions of the AML/CFT Act and the AML/CFT Regulations.
What activities are not allowed under the VASP Act?
The VASP Act prohibits the operation of mining facilities, mixers and tumbler services. All existing entities undertaking a named prohibited activity under the VASP Act must cease to undertake such activity by December 31st, 2024.
Please note that the information provided is a general overview and not intended as legal advice. For further assistance or clarification, please get in touch with our team at Contact@viss.com.hk.
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