The Financial Services Commission (FSC), a regulatory body that monitors all financial services in Mauritius (except for global business and banking related transactions), has released a draft that recommends regulatory guidelines for the island nation’s ‘Custodian Services (Digital Assets) Licence.’
The FSC is now seeking feedback regarding its proposed regulatory framework for cryptoasset-related custodian services. On November 30th, the consultation period will end, and the financial services regulator will be reviewing all recommendations.
Mauritius’ current custodian licenses for digital assets are unsuitable as they cannot ensure the safekeeping of virtual currencies, the FSC noted. The regulatory authority’s new custodian services (digital asset) license will reportedly allow local companies to securely hold cryptoassets for their clients.
Custodians Must Comply With AML Requirements
As a government entity that operates under the aegis of the Mauritius’ Ministry of Financial Services and Good Governance, the FSC will require local companies applying for the crypto custodian license to comply with the country’s strict regulatory policies.
The FSC said:
[T]he holder of the custodian services (digital asset) licence will also be considered as a “financial institution” under the Financial Intelligence and Anti-Money Laundering Act 2002 (the “FIAMLA”) and will be required to adhere to the Anti-Money Laundering and Counter-Terrorist Financing (“AMLCFT”) related laws, regulations and codes AMLCFT in Mauritius including the FSC Code on the Prevention of Money Laundering and Terrorist Financing, the FIAMLA and regulations made there under.
Notably, the custodians of cryptoassets will have to “maintain a minimum stated unimpaired capital” of at least 500,000 Mauritian rupees (appr. $14,430). Licensed custodians will also be required to hire 3 directors to help manage clients' digital assets.
At least one board director should be a resident of Mauritius and they must maintain an office in the country. Additionally, cryptoasset custody solutions providers must have insurance protection for the client funds they are keeping in custody.
Cryptoassets Are "Not Legal Tender", Only "Store Of Value"
Although the FSC does not consider cryptoassets to be legal tender, it does classify them as a legitimate store of value.
In September, the financial regulator had published a report titled: “Digital Assets as an asset-class for investment by Sophisticated and Expert Investors.” According to FSC’s report, only the following types of investors may invest in digital assets: “sophisticated investors”, “expert investors”, “expert funds”, and “specialized/professional collective investment schemes”.
The term “sophisticated investor” usually refers to high-net-worth individuals (HNWIs). These investors have financial assets worth at least $1 million, which does not include their primary residence.