Stablecoin issuer / redeemer in Vanuatu

Virtual Asset Providers Act No. 27 of 2023 (VAPA 2023): This is the cornerstone legislation for virtual assets, including custody services. It defines "virtual assets," "virtual asset service providers" (VASPs), and sets out licensing and operational requirements.

Application Requirements (Section 12, VAPA 2023): An applicant for a VASP license must submit to the VFSC:

Capital Requirements (Section 18, VAPA 2023): A VASP must at all times maintain a minimum unimpaired paid-up capital as prescribed by the Minister through regulation. This regulation is yet to be fully detailed.

Fit and Proper Persons (Section 14, VAPA 2023): Directors and senior management must meet "fit and proper" criteria established by the VFSC, demonstrating competence, integrity, and financial soundness.

Client Assets (Sections 20, 21, 22, VAPA 2023):

A VASP must hold a client’s virtual assets separate from its own assets and the assets of other clients (Section 20(1)).

Virtual assets held by a VASP on behalf of a client are not to be used to satisfy any liability of the VASP or form part of its assets (Section 20(2)).

A VASP is prohibited from using, dealing with, or otherwise disposing of a client's virtual assets without the client's explicit consent, except as authorized by law or a court order (Section 21).

A VASP must maintain adequate records that clearly identify the ownership of each client's virtual assets (Section 22).

Risk Management and Internal Controls (Section 19, VAPA 2023): A licensed VASP must implement robust risk management systems and internal controls designed to ensure the security, integrity, and operational resilience of its services, which could implicitly encourage or require consideration of insurance.

Financial Soundness and Capital Requirements (Section 18, VAPA 2023): The requirement for adequate capital is intended to provide a buffer against operational risks, though it's not a direct substitute for insurance.

Virtual Assets: The most likely general classification is "Virtual Assets" or "Digital Assets" under the Anti-Money Laundering and Counter-Terrorism Financing Act (AML/CTF Act) [CAP 264]. This act defines "virtual asset" broadly and mandates AML/CTF obligations for Virtual Asset Service Providers (VASPs).

Reference: Anti-Money Laundering and Counter-Terrorism Financing Act [CAP 264] (accessible via PacLII: http://www.paclii.org/vu/legis/consol_act/a-mlact2019318/ - Note: This link points to the 2019 version which often incorporates previous amendments.)

Securities: If a stablecoin offers rights akin to shares, debentures, or other investment instruments, it could potentially be classified as a security under the Financial Dealers Licensing Act [CAP 318] or the Companies Act [CAP 191]. This would depend on the specific features and rights attached to the stablecoin.

E-money/Payment Tokens: Vanuatu does not have a distinct e-money or payment token framework similar to the EU's MiCA or PSD2. If a stablecoin's primary function is as a medium of exchange, its issuance and circulation might fall under general financial services regulation or simply as a virtual asset for AML purposes, without a specific "e-money" licensing category for non-bank entities.

For stablecoin issuers, the management of reserves would primarily be a matter of contractual agreement with holders and internal policy, rather than regulatory mandate.

Redemption rights would primarily be governed by the terms and conditions agreed upon between the stablecoin issuer and the holder (i.e., contractual law).

General consumer protection laws or contract laws would apply in case of disputes, but there isn't a specific regulatory framework ensuring timely and full redemption of stablecoins.

Virtual Asset Service Provider (VASP) Obligations: The AML/CTF Act [CAP 264] mandates that entities providing "virtual asset services" (which would include stablecoin exchanges, transfers, custody, etc.) are considered VASPs and must comply with AML/CTF obligations, including registration with the Vanuatu Financial Intelligence Unit (FIU) and implementing robust KYC/CDD procedures.

The Reserve Bank of Vanuatu (RBV) has issued clarifications regarding the legal status of cryptocurrencies. In November 2022, the RBV reiterated that cryptocurrencies are not legal tender in Vanuatu. While this is a regulatory stance and not an enforcement action against a specific entity, it sets the legal framework within which crypto activities operate.

Financial Intelligence Unit (FIU) Reporting: Vanuatu has robust AML/CTF (Anti-Money Laundering/Counter-Terrorism Financing) regulations. Businesses involved in crypto-asset services (e.g., exchanges, custodians, wallet providers, initial coin offering (ICO) issuers) are considered "reporting entities" under the Anti-Money Laundering and Counter-Terrorism Financing Act No. 13 of 2014.

These entities must register with the Vanuatu Financial Intelligence Unit (FIU).

They are subject to strict customer due diligence (CDD) and know-your-customer (KYC) requirements.

They must report suspicious transactions (STRs) and threshold transactions (TTRs) to the FIU.

Vanuatu Financial Services Commission (VFSC): Entities operating as virtual asset service providers (VASPs) in Vanuatu may also require licensing and regulation by the VFSC, depending on the nature of their activities. The VFSC oversees financial services and ensures compliance with relevant laws. Licensing often entails ongoing reporting obligations to the VFSC, though these are regulatory, not tax-specific.

Business License Renewals: All businesses operating in Vanuatu, regardless of their industry, must hold and periodically renew a business license, for which fees apply.