Crypto-funded debit card in Mauritius

Virtual Asset and Initial Token Offering Services Act 2021 (VAITOS Act 2021): This Act defines various virtual asset services and mandates licensing for providers.

FSC Rules (Virtual Asset and Initial Token Offering Services) 2022: These rules provide specific details and requirements for implementing the VAITOS Act.

Definition of Custodian Wallet Service (Section 2, VAITOS Act 2021): "a service to safeguard virtual assets or instruments enabling control over virtual assets, on behalf of natural or legal persons."

Minimum Stated Capital (Schedule 1, FSC Rules (VAITOS) 2022):

A licensee providing "Custodian Wallet Service" must maintain a minimum stated capital of MUR 1,500,000 (approximately USD 37,500, subject to exchange rate fluctuations).

VAITOS Act 2021 (Section 13(1)(g)): A VASP shall "manage client virtual assets and money received from clients in a manner that protects the interests of clients, and, in particular, ensures that they are segregated from the assets of the VASP."

FSC Rules (VAITOS) 2022 (Rule 12 - Client Virtual Assets and Money):

Licensing Process: Applicants must submit a detailed application to the FSC, including:

The Virtual Asset and Initial Token Offering Services Act 2021 (VAITOS Act 2021): This is the cornerstone legislation specifically regulating virtual assets and VASPs. It designates VASPs as "reporting entities" and brings them under the scope of AML/CFT obligations. It provides for the licensing, regulation, and supervision of VASPs by the Financial Services Commission (FSC).

The Financial Intelligence and Anti-Money Laundering Act 2002 (FIAMLA 2002) (as amended): This is the overarching AML/CFT legislation in Mauritius. It establishes the general AML/CFT framework, defines "money laundering," sets out the obligations of reporting entities (including VASPs by virtue of the VAITOS Act), and empowers the Financial Intelligence Unit (FIU).

Identification and Verification of Customers:

Natural Persons: Full name, date of birth, place of birth, nationality, residential address, unique identification number (e.g., passport, national ID card). Verification requires independent, reliable source documents (e.g., certified copies of ID, utility bills).

Legal Entities: Legal name, legal form, proof of incorporation/registration, address of registered office and principal place of business, names of directors/partners/trustees, and identification of individuals authorized to act on behalf of the entity. Verification typically involves corporate documents.

Beneficial Ownership Identification:

Identify and take reasonable measures to verify the identity of the beneficial owner(s) of the customer.

For legal entities, this means identifying the natural person(s) who ultimately own or control 25% or more of the entity, or who otherwise exercise control through other means.

Continuously monitor the business relationship to ensure that transactions being conducted are consistent with the VASP's knowledge of the customer, their business and risk profile, including, where necessary, the source of funds.

Regularly update customer information and beneficial ownership data.

Enhanced Due Diligence (EDD):

Customers who are Politically Exposed Persons (PEPs), their family members, or close associates.

Customers from high-risk geographic areas (as identified by FATF or local regulators).

Transactions involving new or developing technologies or products that favour anonymity.

Complex, unusually large transactions, or unusual patterns of transactions that have no apparent economic or lawful purpose.

Virtual Asset: The VAITOS Act defines a "Virtual Asset" as "a digital representation of value that can be digitally traded or transferred and used for payment or investment purposes and includes a digital representation of value which is used as a medium of exchange, a unit of account or a store of value." Most stablecoins, by nature, fit this broad definition, particularly asset-backed ones.

Reference: Virtual Asset and Initial Token Offering Services Act 2021, Section 2.

E-money: If a stablecoin primarily functions as electronic money, representing a claim on fiat currency and used for payment services (e.g., a fiat-backed stablecoin directly redeemable 1:1 for a national currency and widely accepted for payments), it could fall under the purview of the Bank of Mauritius (BOM) and the National Payment Systems Act 2018. The BOM regulates e-money issuers and payment service providers. This could lead to a dual licensing requirement (FSC for Virtual Asset Service Provider and BOM for e-money issuer) or require clarification from authorities.

Evidence fact mu.stablecoin.reference-national-payments-system-act not found (may have been renamed).

"Operating a Virtual Asset Exchange" (if they also facilitate trading).

"Transferring Virtual Assets."

"Providing Custodian Wallet Services" (if they hold users' stablecoins).

Client Asset Segregation: VASPs are required to segregate client assets from their own, which is crucial for the security of stablecoin backing.

Issuing warnings against unregulated activities.

Entity Targeted: The General Public and Unlicensed Entities. Violation Type: Engaging in or promoting unregulated virtual asset services, pyramid schemes, or other illicit activities involving virtual assets. Penalty Amount: N/A (warnings do not carry a direct penalty amount for the warning itself, but non-compliance with regulations could lead to severe penalties or legal action if a regulated entity were involved).

Entity Targeted: All financial institutions and VASPs subject to AML/CFT regulations. Violation Type: Previous strategic deficiencies in the AML/CFT regime identified by FATF. Penalty Amount: N/A (the "penalty" was the grey-listing itself, which impacted the country's financial reputation).

Trading as a Business: If an individual or company engages in frequent, systematic, and organised trading of cryptocurrencies with the intention of generating profits (e.g., day trading, arbitrage, professional speculation), the profits will be taxed as business income.

Using Crypto for Purchases: If cryptocurrency is used as a medium of exchange to purchase goods or services, the VAT applicable to the underlying goods or services remains payable in MUR. The crypto merely acts as payment; it does not change the VAT status of the underlying transaction.