Stablecoin issuer / redeemer in Monaco

E-money: A stablecoin could be classified as e-money if it meets the definition under Monaco's Law No. 1.339 of 7 September 2007 on Payment Services and Electronic Money.

Definition: Electronic money is defined as electronically stored monetary value as represented by a claim on the issuer, which is issued on receipt of funds for the purpose of making payment transactions, and which is accepted by a natural or legal person other than the electronic money issuer.

Implication: If a stablecoin represents a claim on fiat currency at par and is used for payments, it would likely fall under this classification, triggering stringent e-money regulations.

Payment Tokens / Utility Tokens: Monaco's key legislation for digital assets is Law No. 1.503 of 23 December 2020 on Initial Coin Offerings (ICOs) and Digital Assets, as amended by Law No. 1.517 of 23 February 2022.

If classified as E-money: Under Law No. 1.339, e-money issuers are typically required to safeguard funds received in exchange for e-money. This usually involves holding funds in a separate account at a credit institution or investing them in secure, low-risk assets. The exact requirements would align with those for traditional e-money institutions.

If classified as E-money: Issuing e-money in Monaco requires prior authorization from the AMSF. The application process would involve demonstrating adequate capital, robust governance, risk management systems, and compliance with AML/CFT requirements.

If classified as E-money: Law No. 1.339 grants holders of e-money the right to redeem their e-money at par value at any time. This is a fundamental consumer protection feature of e-money regulations.

If classified as a Security: There are no direct "reserve requirements" for the token itself, but the issuer would be subject to general capital adequacy requirements for financial institutions.

Security Tokens: If a stablecoin confers rights that are characteristic of financial instruments (e.g., rights to dividends, shares in profits, or debt instruments), it would likely be classified as a "security token" under Law No. 1.503, which then refers to Monaco's Law No. 1.332 of 10 July 2007 on Financial Instruments.

Implication: This would subject the stablecoin to securities regulations, including prospectus requirements, market abuse rules, and potentially oversight by the CCAF.

For Digital Asset Offerings (ICOs) under Law No. 1.503: Any person or entity wishing to make a public offer of digital assets (an ICO) in Monaco, seeking authorization, must obtain prior authorization from the CCAF. This authorization is granted after the CCAF has approved the white paper detailing the digital asset.

For Virtual Asset Service Providers (VASPs): Monaco has implemented FATF recommendations. Any entity providing services related to virtual assets, such as custody, exchange, or transfer, would need to comply with AML/CFT regulations enforced by the AMSF and may require registration or licensing as a VASP.

Monaco does not have specific regulations addressing algorithmic stablecoins. Given the lack of direct asset backing, it would be challenging for an algorithmic stablecoin to be classified as "e-money" under current Monegasque law, as e-money typically implies a claim on tangible monetary value.

If an algorithmic stablecoin were issued via an ICO, Law No. 1.503 would require extremely detailed and transparent disclosure in the white paper about the algorithmic mechanism, the absence of direct fiat backing, the associated risks, and the volatility. Regulators (CCAF/AMSF) would scrutinize such offerings for investor protection and market integrity, potentially deeming them high-risk. Depending on its design, it might even be classified as a speculative security.

Requirement: Registration with SICCFIN for AML/CFT purposes.

A local entity (e.g., a Monégasque company) is generally required to operate as a VASP in Monaco.

The entity must have a physical presence, management, and operational substance within the Principality.

Suspicious Transaction Reporting (STR): Establishing internal procedures for identifying and reporting suspicious transactions to SICCFIN.

Record-Keeping: Maintaining records of customer identification data, transactions, and risk assessments for a specified period (typically 5-10 years).

Risk Assessment: Implementing a comprehensive, risk-based approach to AML/CFT, including institutional risk assessments and client risk profiling.

Internal Controls: Developing and implementing internal AML/CFT policies, procedures, and controls, including the appointment of an AML/CFT Compliance Officer.

Evidence fact mc.aml.identification-and-verification-of-the-the not found (may have been renamed).

Natural Persons: Obtain and verify the client's name, address, date and place of birth, nationality, and a unique identification number (e.g., passport or national ID card number). Verification must be based on reliable, independent source documents or data.

Legal Entities: Obtain and verify the name, legal form, address of the registered office, company registration number (if applicable), articles of association, and proof of legal existence and powers.

Identification of the Beneficial Owner (BO):

Ongoing Monitoring of the Business Relationship:

Enhanced Due Diligence (EDD):

Monaco is itself identified as a high-risk third country by the EU and is under increased monitoring by the FATF