Crypto-funded debit card in Andorra

Exchange between digital assets and fiat currencies: This covers cryptocurrency exchanges that allow users to buy and sell crypto with traditional money (EUR, USD, etc.).

If a payment processor's activities involve the direct handling, exchange, or custody of digital assets (e.g., accepting crypto payments on behalf of merchants and converting them to fiat, or holding crypto for settlement), they will fall under the VASP licensing requirements for exchange and/or custody services.

If a payment processor only facilitates fiat currency transactions that are related to virtual asset services (e.g., processing a credit card payment to a crypto exchange, but never touching the crypto itself), they might fall under traditional payment services regulations (requiring a payment institution license) rather than a VASP license, but the specifics would depend on the exact service model and AFA interpretation. Generally, if there's any direct interaction with the virtual asset, a VASP license is needed.

There is no specific EUR 125,000 threshold for custody and administration services for virtual assets under Andorra’s Law 24/2022; licensing is based on compliance requirements rather than a fixed monetary amount.

Higher amounts may be required depending on the volume and complexity of operations, or if combined with other licensed activities.

A significant local presence is typically required. This often includes:

Physical office: Establishing an operational base in Andorra.

Designation of an AML Officer: Appointing a qualified AML officer responsible for overseeing compliance.

Record Keeping: Maintaining records of client identification, transactions, and due diligence for a specified period.

AML/KYC (Anti-Money Laundering / Know Your Customer):

Customer Due Diligence (CDD): Implementing appropriate risk-based procedures for identifying and verifying the identity of clients (individuals and legal entities).

Law 14/2017 of 22 June on the prevention and fight against money laundering and the financing of terrorism: This is Andorra's principal AML/CFT law, establishing the general obligations for all obliged entities. It has been subsequently amended to incorporate international recommendations.

Law 9/2023 of 23 March on digital assets: This specific law regulates virtual assets and their service providers, bringing VASPs under the scope of Law 14/2017 and defining the specific licensing and operational requirements for these entities. This law formally identifies VASPs as obliged entities for AML/CFT purposes.

Exchange between virtual assets and fiat currencies.

Custody and/or administration of virtual assets or instruments enabling control over virtual assets.

Identification and Verification:

Natural persons in Andorra must have their identity verified using reliable, independent source documents, data, or information (e.g., official ID cards, passports), and Andorra now permits digital and remote identity verification methods such as document scanning and biometric liveness checks under its UIFAND-compliant AML framework.

Beneficial Ownership (BO):

Identify and take reasonable measures to verify the identity of the beneficial owner(s) of legal entities. This includes understanding the ownership and control structure. The threshold for beneficial ownership is typically 25% or more of the shares or voting rights, or control through other means.

Evidence fact ad.aml.ongoing-due-diligence not found (may have been renamed).

Evidence fact ad.aml.suspicious-activity-reporting-sar-reporting not found (may have been renamed).

VASPs must apply a risk-based approach to CDD. This means the intensity of CDD measures should be proportionate to the assessed ML/TF risks.

AFA Authorization: Any entity intending to issue stable digital assets to the public in Andorra, or provide services related to them (such as exchange or custody), must obtain prior authorization from the AFA.

Full Backing: The law generally requires stable digital assets to be fully backed by the underlying reserve assets they purport to reference. This backing must be sufficient to cover all issued stable digital assets.

Segregation: Reserve assets must be segregated from the issuer's operating funds and managed in a way that minimizes risk of loss.

Right to Redeem: Law 8/2023 generally mandates that holders of stable digital assets have a right to redeem their tokens at par value for the underlying reserve assets (or the fiat currency they represent) from the issuer.

Fit and Proper Requirements: The management and shareholders of the issuing entity must meet "fit and proper" criteria.

Exemption: There is an annual tax exemption of €3,000 for capital gains derived from the transfer of movable assets. Gains below this threshold are not taxed.

For Belgium (Dutch-speaking region), a 10% capital gains tax on certain financial assets exceeding €3,000 is scheduled to take effect from January 1, 2026, but it is not a current rule and does not apply to all capital gains.

General rate: 4.5%