DeFi protocol frontend in Maldives

Pure Crypto-to-Crypto: Currently, there is no specific license required from the MMA for a platform exclusively facilitating crypto-to-crypto trades. However, such entities would still be subject to general AML/CFT obligations if identified as VASPs under Maldivian law.

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.

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.

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.

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.

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.

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:

Exchange between one or more forms of virtual assets.

Exchange between virtual assets and fiat currencies.

Transfer of virtual assets.

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.

Lack of Licensed Entities: Since no crypto businesses are licensed by the MMA, there are no regulated entities for the MMA to "enforce" against in the traditional sense (e.g., for non-compliance with licensing conditions or specific crypto-related regulations). Any potential criminal activity involving crypto would fall under general criminal law enforcement by the police, rather than specific financial regulatory enforcement.