The Virtual Asset and Initial Token Offering Services Act 2021(“the Act”) has been issued in December 2021. It provides for:
• The licensing, supervision and monitoring of Virtual Asset Service Providers (VASPs).
• The registration procedures and requirements for the issuance of initial token offerings.
• The technical requirements, governance structures, risk management and information disclosure issues for virtual asset service providers.
• The protection of the interests of clients of virtual asset service providers; and
• Compliance with international standards of the Financial Action Task Force on anti-money laundering and combatting the financing of
terrorism and activities related to the proliferation of weapons of mass destructionVirtual Asset (VA) means any digital representation of value that may be digitally tra ded or transferred and may be used for payment or investment purposes. However, it excludes any digital representation of fiat curren- cies, securities and any other financial assets that fall under the Securities Act 2005.
Virtual Asset Service Providers (VASPs)
Virtual Asset Service Providers are allowed to carry out the below business activities under the Act. It is important to note that only companies incorporated under the Mauritius Companies Act 2001 that can apply for the licence of VASPs. A Virtual Asset Service Provider (VASP) shall also have a physical office in Mauritius.
Activities of VASP: -
1) Exchange between virtual assets and fiat currencies
2) Exchange between one or more forms of virtual assets
3) Transfer of virtual assets
4) Safekeeping of virtual assets or instruments enabling control over virtual assets
5) Administration of virtual assets or instruments enabling control over virtual assets
6) Participate in or provide financial services to issuers offer and/or sale of virtual asset
The business activities of a VASP shall be directed and managed from Mauritius. The following criteria will be taken into consideration in determining whether the activities are being directed and managed from Mauritius:
• Where all strategy, risk management & operational decision making are being taken
• Where the executive person involved in decision making are located
• Where meetings of the board of directors are held
• Where management meets to effect policy decisions
• The location and residence of officer or employees
• The location and residence of one or more directors
The Act also provides for activity of Virtual Asset Exchange. A Virtual Asset Exchange is a centralised or decentralised virtual platform which facilitates the exchange of virtual assets for fiat currencies or other virtual assets on behalf of third parties for a fee, commission or other benefits. A Virtual Asset Exchange can also hold custody or controls virtual assets on behalf of its clients to facilitate the exchanges. It can also purchase virtual assets from a seller when the transactions or bids and offers are matched in order to sell them to a buyer.
The activities that may be conducted by a Virtual Asset Service Provider are as follows:
| Class of Licences | Activities | Details | Capital Requirements USD | Govt Processing Fee USD | Govt Annual Fee USD |
|---|---|---|---|---|---|
Class “ M” |
Virtual Asset Broker-Dealer/Market Maker |
Exchange between virtual assets and fiat currencies or exchange between one or more forms of virtual asset |
46,500 |
1,000 |
2,000 |
Class “ O” |
Virtual Asset Wallet Services |
Transfer virtual assetsSufficient Working capital to continue business for a period of 12 months |
1,000 |
1,900 |
|
Class “R” |
Virtual Asset Custodian |
Safekeeping and/or administration of virtual assets or instruments enabling control over virtual assets |
120,000 |
1,500 |
2,500 |
Class “I” |
Virtual Asset Advisory Services |
Participation in and provision of financial services related to an issuer’s offer and/or sale of a virtual asset |
Sufficient working capital to be capable of meeting its debts as they fall due |
3,000 |
5,000 |
Class “S” |
Virtual Asset Market Place |
A virtual asset exchange |
155,000 |
3,000 |
5,000 |
Initial Token Offerings (ITOs) are offers of sales made to the public by an issuer of virtual token for fiat currency or other virtual asset. Virtual tokens are cryptographically-secure digital representation of a set of rights including smart contracts which are provided on a digital platform.
Smart Contract means a form of technology arrangement consisting of computer protocol or an agreement concluded wholly or partly in electronic form and must be automated and enforceable by computer code.
Obligations of Issuers of Initial Token Offerings
An issuer of initial token offerings shall provide full and accurate disclosure of information in its White Paper. The following matters shall be specified in the White Paper:
•Brief descriptions of directors, senior management, key personnel and advisers of the issuer
•The objective or purpose of the ITO including information on the ITO project to be managed and operated by the issuer
•The key characteristics of the virtual token
•The business plan of the issuer
•The targeted amount to be raised through the ITO project and how the proceeds will be applied
•The rights, conditions and functions attached to the virtual token
The White Paper shall be published on the website of the issuer or a third party that I representation the issuer which must be accessible and downloadable by potential purchasers for the duration of an offer and not less than 15 days after the offer period ends. An offer period shall not exceed 6 months.
Non-Fungible Token (NFT) is a token recorded using distributed ledger technology (Blockchain), whereby each NFT recorded is distinguishable from any other NFT which allows NFT to be given unique features and to be associated with distinct physical or virtual asset. NFTs are usually linked to items such as artworks, music or videos.
Regulatory Treatment of NFT in Mauritius
NFT as a digital representation but not used for payment or investment purposes
NFTs which are issued and marketed to the general public and which has a unique digital colle ctible linked with underlying asset but not used for payment or investment purposes do not fall under any regulation in Mauritius.
NFTS displaying characteristics of securities
Any NFT which has the characteristic of a digital colle ctible and transferable financial asset (Fractional NFT) shall be considered as “securities” under the laws and regulations in Mauritius.
Where a NFT constitutes a share or an interest in a colle ctive investment scheme, it shall be regulated and apply for a lic ence. The platform facilitating the sale and secondary trading of the NFT shall also apply for either a securities exchange or securities trading system lic ence in Mauritius.
Fractional NFT is where numerous purchasers are allowed to acquire a partial ownership or interest in an underlying financial asset or a collective investment scheme.
Other NFTs
Any person who intends to issue NFTs which fall under the category of virtual assets shall apply for token offerings registration under the Virtual Asset and Initial Token Offering Services Act in Mauritius.
Any person who intends to administer, hold, transfer or exchange NFTs which fall under the category of virtual asset shall apply for a virtual asset service provider lic ence in Mauritius.
A virtual asset service provider or and issuer of initial token offerings shall at all times:
•Act honestly and fairly
•Act with due skill, care and diligence
•Refrain from engaging in any improper or illegal conduct
•Maintain adequate financial resources and solvency
•Have effective corporate governance arrangements in compliance with the Act
•Implement and maintain measures for preserving the confidentiality of information of its clients as per the Data Protection Act
•Implement and maintain policies and procedures to combat money laundering and the financing of terrorism
Premier Financial Services Limited provides the following main services with respect to the activities of a Virtual Asset Service Provider and initial Token Offerings:
• Structuring services
• Licence Application and renewal
• Provision of registered office address
• Provide professional directors and qualified secretary resident in
• Mauritius
• Opening of bank accounts
• Preparation of and filing of statutory accounts
• Preparation and filing of tax returns