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The Virtual Asset Service Providers Act, 2024 (VASP Act), came into force on September 1, 2024.
The VASP Act was implemented to regulate virtual asset services providers (VASPs) in an effort to mitigate potential risks such as money laundering and terrorist financing. This law applies to:
- International Business Companies (IBCs) that intend to, or are currently, providing services in or from within Seychelles.
- All entities issuing Initial Coin Offerings (ICOs) and Non-Fungible Tokens (NFTs).
Licensing is required solely because the entity is registered or incorporated in Seychelles, regardless of where the virtual asset services are conducted.
Activities allowed under the VASP Act
- Virtual Asset Wallet Providers
- Virtual Asset Exchange
- Virtual Asset Broking
- Virtual Asset Investment Provider
Activities that are not allowed under the VASP Act
- Mining facilities
- Mixers and tumbler services
Transitional provision
An IBC carrying out a VASP activity prior to the commencement of the VASP Act will have until December 31, 2024, to submit a VASP application to the Financial Services Authority. An IBC that fails to submit a complete application will be in breach of the VASP Act and subject to enforcement action that includes striking off the name from the Registry, imposition of penalties, and/or relevant Court actions.
Licensing criteria and obligations
Among the criteria for licensing are solvency, capital, insurance requirements, cybersecurity protocols, prudential and market conduct standards, audit obligations, and fit and proper assessments for directors and principal officers. Additionally, VASPs must comply with substance requirements if the service is provided in or from Seychelles (e.g., having a resident director and offices in Seychelles), as well as compliance with the provisions of the AML/CFG Act and Regulations.
