Stablecoin issuer / redeemer in Saint Vincent and the Grenadines

Virtual Asset Business Act, 2023 (VABA 2023): This is the overarching legislation governing virtual asset businesses (VABs) in SVG. It aims to prevent money laundering and terrorist financing, protect consumers, and ensure the orderly development of the virtual asset sector.

As Virtual Assets: Stablecoins are primarily classified as "virtual assets" under the VABA 2023.

E-money/Payment Tokens: The VABA 2023 does not create a separate classification specifically for "e-money" or "payment tokens" for privately issued stablecoins beyond their classification as virtual assets. If a stablecoin functions as a medium of exchange or store of value, it is regulated as a virtual asset and its issuer as a Virtual Asset Business (VAB). SVG does not have a distinct E-money Act that would cover private stablecoins separately from virtual asset regulation.

Securities: The VABA 2023 excludes digital representations of fiat currencies, securities, and other financial assets that are already covered by existing financial legislation (e.g., the Securities Act, Banking Act, or Insurance Act).

This means that if a stablecoin, due to its structure or underlying assets, meets the definition of a "security" under the Securities Act, 2021 (or its predecessors), it would likely be regulated under that Act, possibly in addition to or instead of the VABA, depending on the specifics and interpretation by the FSA. Most typical fiat-backed stablecoins are designed not to be securities, but this is a crucial distinction.

Mandatory Licensing: Any entity wishing to operate as a Virtual Asset Business (VAB) in Saint Vincent and the Grenadines must obtain a license from the FSA.

Issuance of a virtual asset (which includes stablecoins) or participation in virtual asset services.

Adequate Financial Resources: VABs must maintain "adequate financial resources" to carry on their business.

Safeguarding Client Assets: VABs are required to segregate client virtual assets from their own assets and hold them in a manner that protects clients' interests. This implicitly requires proper management and safeguarding of the reserves for asset-backed stablecoins.

Audited Financial Statements: VABs must submit audited annual financial statements. For asset-backed stablecoin issuers, this would involve demonstrating the existence and sufficiency of their reserves.

Proof of Reserves (Implicit): While the VABA might not explicitly use the term "proof of reserves," the requirements for safeguarding client assets, adequate financial resources, and transparent accounting essentially demand that asset-backed stablecoin issuers can demonstrate their reserves.

Financial Services Authority (FSA): The supervisory authority responsible for licensing, regulating, and overseeing virtual asset businesses under the VABA 2023.

Transparency and Disclosure: VABs must provide clear and accurate information to clients regarding the terms and conditions of services, including the nature of the virtual assets.

Fair Treatment of Clients: VABs are required to act honestly and fairly in the best interests of their clients.

Identify and Verify Customer Identity:

For natural persons: Obtain full name, residential address, date of birth, nationality, and a unique identification number (e.g., passport, national ID card). Verification typically requires independent, reliable source documents.

For legal persons/entities: Obtain legal name, address of registered office and principal place of business, incorporation details (e.g., certificate of incorporation, articles of association), and identify beneficial owners (those who ultimately own or control 25% or more of the entity).

Understand the Purpose and Intended Nature of the Business Relationship: Gather information about why the customer is seeking the services and how they intend to use them.

Conduct Ongoing Monitoring: Regularly review the business relationship and transactions undertaken to ensure they are consistent with the entity's knowledge of the customer, their business, and risk profile, including (where necessary) the source of funds.

Risk-Based Approach: Apply a risk-based approach to CDD.

Enhanced Due Diligence (EDD): Required for high-risk customers, such as Politically Exposed Persons (PEPs), customers from high-risk jurisdictions, or transactions involving complex structures or unusually large amounts. This involves more rigorous verification, deeper understanding of source of funds/wealth, and higher-level approval for establishing relationships.

Obligation to Report: All reporting entities (which would include VASPs if their activities are considered relevant financial business) have a legal obligation to report any transaction (or attempted transaction) where there are reasonable grounds to suspect that funds are the proceeds of criminal activity or are linked to terrorist financing.

Recipient: Reports must be submitted to the Financial Intelligence Unit (FIU) of Saint Vincent and the Grenadines.

Timeliness: STRs must be filed promptly, "without delay," upon forming the suspicion.

No Tipping-Off: It is an offense to disclose to the customer or any third party that a suspicious transaction report has been or will be made.

Customer Identification Data: All documents used for CDD, including copies of identification documents and verification records.

Transaction Records: Details of all transactions, including amounts, types of currency/virtual assets, dates, and parties involved.

Business Correspondence: Records of communications with customers and third parties related to transactions and the business relationship.

STRs and Internal Reports: Copies of all suspicious transaction reports filed and any internal reports or analyses leading to such reports.

Retention Period: Records must generally be kept for a minimum of five (5) years after the business relationship has ended or after the date of the transaction.

Financial Services Authority (FSA):

Financial Intelligence Unit (FIU):

Corporate Income Tax Rate: The standard corporate income tax rate in SVG is generally around 30%.

However, fees charged by Virtual Asset Service Providers (VASPs) for their services (e.g., exchange fees, custodial fees, transaction fees) would generally be considered a supply of services and thus subject to VAT at the standard rate (currently 16%).