Crypto-funded debit card in Maldives

Crypto-to-Fiat (or Fiat-to-Crypto): If an exchange involves the exchange of fiat currency (Maldivian Rufiyaa - MVR or other fiat currencies) for virtual assets, or vice-versa, it could potentially fall under existing financial services regulations, such as those for money services businesses or payment service providers. This would require an appropriate license from the MMA for those traditional activities. The scope of these existing licenses might need to be interpreted or expanded to explicitly cover VA activities.

Processing payments in MVR (or other fiat) for goods/services, with crypto merely as an underlying settlement layer: This would likely require a payment service provider license from the MMA under the existing payment systems framework.

Local Presence: For any financial service that requires an MMA license (e.g., payment services), a physical local presence, typically in the form of a locally incorporated entity and local management, is usually mandatory. For purely crypto-related activities without a specific license, a local presence might not be legally mandated but is generally advisable for effective AML/CFT compliance and to engage with regulators.

AML/KYC (Anti-Money Laundering / Know Your Customer): This is the most crucial requirement for any entity dealing with virtual assets in the Maldives, regardless of licensing. VASPs are expected to:

Implement robust KYC procedures for all customers.

Conduct ongoing customer due diligence.

Monitor transactions for suspicious activity.

Maintain records for a specified period.

Report suspicious transactions (STRs) to the Financial Intelligence Unit (FIU) of the Maldives Monetary Authority.

Implement sanctions screening.

Appoint an AML Compliance Officer.

Adhere to the "Travel Rule" as per FATF guidance.

Prevention of Money Laundering and Financing of Terrorism Act (No. 10/2014): This is the core AML/CFT legislation in the Maldives. VASPs, even without specific licensing, are expected to comply with its provisions.

Capital Requirements: There are no specific capital requirements for VASPs as VASPs yet. However, if a business falls under an existing financial license (e.g., payment service provider, money service business), then the capital requirements for that specific license would apply.

For existing regulated activities: If your VASP business model falls under an existing MMA license (e.g., payment service provider), you would follow the application process for that specific license. This typically involves submitting a detailed business plan, financial projections, governance structure, fit and proper assessments for key personnel, and demonstrating compliance with relevant regulations.

Reference: Maldives Payment Systems Act (Law No. 17/2016), which provides the framework for payment systems and e-money services.

MMA's Consistent Position: The Maldives Monetary Authority has repeatedly stated that cryptocurrencies are not recognized as legal tender in the Maldives. They also do not provide licenses or regulatory oversight for any cryptocurrency-related activities or businesses operating within the country.

Public Advisories: The MMA has issued warnings to the public about the inherent risks of cryptocurrencies, including price volatility, cybersecurity risks, potential for fraud, and the absence of consumer protection. These advisories are the primary "action" taken by the regulator concerning crypto.

Exchange between virtual assets and fiat currencies.

VASP Registration/Licensing: However, entities providing custodial services for virtual assets would likely fall under the definition of a Virtual Asset Service Provider (VASP) as defined by the AML/CFT Act and subsequent regulations. VASPs are subject to AML/CFT obligations and may require registration or licensing with the MMA/FIU.

The definition of a VASP, consistent with FATF standards, includes entities that conduct one or more of the following activities or operations for or on behalf of another natural or legal person: