Virtual Asset Service Provider And Issuer Of Initial Token Offering

The blockchain technology industry has grown exponentially over the last decade and is now booming into mainstream popularity with applications in various sectors: cryptocurrency, financial services, healthcare, IoT, supply chain management, etc. For the last years, there has seen a rapid increase in the number of crypto businesses looking to innovate and profit. However, because the technology is so new and its global implications so vast, many governments have not adapted yet, creating a lack of supervision and regulation in this constant evolving space. Similar to governments, many banks make it difficult to get a bank account that will permit cryptocurrency operations.

The Virtual Asset and Initial Token Offering Services Act 2021 (the “Act” or “VAITOS Act 2021”), has come into force on the 7th of February 2022 in Mauritius to provide for a regulatory framework for new and developing activities regarding Virtual Assets (“VAs”) and Initial Token Offerings (“ITOs”), as well as to safeguard against money laundering and financing of terrorism associated with VAs.

Complementing the VAITOS framework, the FSC Mauritius has also issued numerous rules to further enhance regulatory measures within Mauritius in relation to

  1. Capital and other Financial Requirements,
  2. Client Disclosure,
  3. Custody of Client Assets,
  4. Cybersecurity,
  5. Publication of Advertisements,
  6. Risk Management,
  7. Statutory Returns and
  8. Travel.

The Act and the VAITOS Rules empower the Financial Services Commission (the “FSC”) to regulate and supervise Virtual Asset Service Providers (“VASPs”) and issuers of ITOs within the non-bank financial services sector in Mauritius.

Following the Mauritius National Budget 2024/2025, gains on sale of Virtual Asset and Virtual Token are tax exempt.

What is a Virtual Asset?

A Virtual Asset, according to the VAITOS Act 2021, is a digital representation of value which may be digitally traded or transferred, and may be used for payment or investment purposes, but does not include a digital representation of fiat currencies, securities and other financial assets that fall under the purview of the Securities Act.

What is a Virtual Token?

A Virtual Token (“VT”) according to the VAITOS Act 2021, means any cryptographically secured digital representation of a set of rights, including smart contracts, provided on a digital platform and issued or to be issued by an issuer of initial token offerings.

Licensed activities and Capital Requirements

The Act regulates two main categories of activities:

A person who conducts, as a business activity, for or on behalf of another person one or more of the following activities or operations as per the below table

Companies registered under the Act and making issuance of ITOs. An ITO means an offer for sale to the public, by an issuer of initial token offerings, of a VT in exchange for fiat currency or another VA.

TYPE OF LICENCE AUTHORISED ACTIVITIES CAPITAL REQUIREMENTS
VA Broker – Dealer (Class M) Exchange between VAs and fiat currencies Exchange between one or more forms of VAs 2,000,000 MUR or its equivalent in any other fiat currency.
VA Wallet Services (Class O) Transfer of VAs Sufficient working capital in fiat currency to continue business for a period of 12 months, based on realistic forecasts for the business in different market conditions, both negative and positive scenarios.
VA Custodian (Class R) Safekeeping of VAs or instruments enabling control over VAs

Administration of VAs or instruments enabling control over Vas

5,000,000 MUR or its equivalent in any other fiat currency.
VA Advisory Services (Class I) Participation in and Provision of financial services related to an issuer’s offer and/or sale of VAs Sufficient working capital to be capable of meeting debts as they fall due.
VA Market Place (Class S) Virtual Asset Exchange 6,500,000 MUR or its equivalent in any other fiat currency.
Issuer of Initial Token Offering Making an offer for sale to the public of a VT in exchange for fiat currency or another VA Sufficient working capital to be capable of meeting debts as they fall due.

In the event that a virtual asset service provider has multiple licences, it shall be subject to the combined capital requirement for each licence held by the virtual asset service provider.

Statutory Fees

TYPE OF LICENCE STATUTORY FEES
VA Broker – Dealer (Class M) Processing: USD 1,000
Annual: USD 2,000
VA Wallet Services (Class O) Processing: USD 1,000
Annual: USD 1,900
VA Custodian (Class R) Processing: USD 1,500
Annual: USD 2,500
VA Advisory Services (Class I) Processing: USD 3,000
Annual: USD 5,000
VA Market Place (Class S) Processing: USD 3,000
Annual: USD 5,000
Issuer of Initial Token Offering Processing: USD 2,000