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Vanuatu

Retail_Trading_Status

Allowed-Regulated Unknown
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Created
2025-06-26 13:25
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Executive Summary

Retail trading of cryptocurrencies is permitted in Vanuatu under a new regulatory regime established by the Virtual Asset Service Provider (VASP) Act passed in March 2025. The Vanuatu Financial Services Commission (VFSC) is designated as the licensing authority, enforcing AML/CTF and Travel Rule standards as per FATF recommendations. While cryptocurrency trading is allowed, the VFSC advises caution to retail investors due to the high risks involved, and investments are not protected by statutory compensation arrangements. Previously, the Reserve Bank of Vanuatu (RBV) had issued warnings against cryptocurrency trading, reflecting a shift towards formal regulation with the new act.

Key Pillars

The key regulatory pillars in Vanuatu consist of: The Vanuatu Financial Services Commission (VFSC) as the primary regulator and licensing authority for Virtual Asset Service Providers (VASPs); implementation of core compliance requirements including Anti-Money Laundering (AML), Counter-Terrorism Financing (CTF), and Travel Rule standards in line with Financial Action Task Force (FATF) recommendations; and a licensing regime requiring crypto firms to register and operate under various classes of licenses based on the services provided.

Landmark Laws

Virtual Asset Service Provider (VASP) Act (March 2025): Establishes a legal framework for digital assets and cryptocurrency-related businesses, designating the VFSC as the licensing authority and empowering it to enforce AML/CTF and Travel Rule standards.
Financial Dealers Licensing (Amendment) Act No. 9 of 2021: While pre-dating the VASP Act, it indicates a direction towards regulated AML/KYC for digital asset licensees.
Anti-Money Laundering and Counter-Terrorism Financing Act No. 13 of 2014: Requires full compliance from Class D license holders, including KYC principals such as CDD and ECDD, and keeping records of UBOs of digital assets.

Considerations

Legal Classification: Cryptocurrencies are not recognized as legal tender in Vanuatu.
Risks and Concerns: The VFSC cautions the public that investments in virtual assets and cryptocurrencies are not protected by any statutory compensation arrangements in Vanuatu. The VFSC advises caution, stating that virtual assets may be more suitable for sophisticated or expert investors.
Operational Challenges: Retail investors will likely need to trade through VASPs licensed and regulated by the VFSC, adhering to KYC/AML and other compliance measures.

Notes

Historical Context: In October 2017, the Reserve Bank of Vanuatu (RBV) strongly advised against engaging in Bitcoin or other cryptocurrency trading. In August 2021, the VFSC reiterated that cryptocurrencies are not legal tender and warned retail investors about the risks.
Future Plans: The VASP Act aims to provide stability and oversight to the digital asset sector in Vanuatu, potentially opening economic and social opportunities.
VFSC's Stance: The VFSC emphasizes that investments in virtual assets are not protected by any statutory compensation arrangements in Vanuatu and does not recommend them for retail investors without a thorough understanding of the associated risks.

Detailed Explanation

Vanuatu has transitioned to a regulated environment for cryptocurrencies with the passage of the Virtual Asset Service Provider (VASP) Act in March 2025. This act establishes a legal framework for digital assets and cryptocurrency-related businesses, designating the Vanuatu Financial Services Commission (VFSC) as the licensing authority. The VASP Act empowers the VFSC to enforce Anti-Money Laundering (AML), Counter-Terrorism Financing (CTF), and Travel Rule standards in line with the Financial Action Task Force (FATF) recommendations. According to CoinGeek in April 2025, the VASP Act was passed on March 26 and includes a licensing and reporting framework for exchanges, NFT marketplaces, digital asset custody providers and ICOs. The VFSC stated on March 29, 2025, that the VASP Act establishes a stable regulatory framework for digital business transactions and opens numerous opportunities for Vanuatu economically and socially. Cointelegraph reported in March 2025 that the VASP Act gives crypto licensing authority to the VFSC. Invezz reported in April 2025 that crypto firms must register and operate under a licensing regime.

While retail trading of cryptocurrencies is now permitted, it falls under this new regulatory regime. Companies offering cryptocurrency services must obtain a license from the VFSC and adhere to specific operational and compliance requirements, including KYC/AML procedures like customer due diligence, transaction monitoring, and reporting suspicious activities.

Historically, the Reserve Bank of Vanuatu (RBV) had issued warnings against cryptocurrency trading. In October 2017, the RBV advised the public and financial institutions to refrain from engaging in Bitcoin or other cryptocurrency trading, stating that cryptocurrencies were not recognized as legal tender and posed significant risks. An August 2021 press release from the VFSC reiterated that cryptocurrencies are not legal tender in Vanuatu and warned retail investors about the risks, noting that such investments were not protected by any statutory compensation arrangements and that no Class D licenses for digital asset dealers had been issued at that time. The Vanuatu Financial Services Commission (VFSC) Guidance Notes on Digital Assets references the Financial Dealers Licensing (Amendment) Act No. 9 of 2021 and states that a holder of Class D license must ensure full compliance with the Anti- Money Laundering and Counter -Terrorism Financing Act No. 13 of 2014, applying KYC principals such as CDD and ECDD, and keeping details of UBO of digital assets.

The VFSC continues to advise caution for retail investors, stating that it

Summary Points

Okay, here's the regulatory analysis report on Retail_Trading_Status in Vanuatu, converted into a clear, well-structured bullet point format:

Retail Trading of Cryptocurrencies in Vanuatu: Regulatory Overview (June 26, 2025)

I. Current Regulatory Status:

  • Allowed-Regulated: Retail trading of cryptocurrencies by individuals is permitted, but within a regulated framework.

II. Key Regulatory Bodies and Roles:

  • Vanuatu Financial Services Commission (VFSC):
    • Licensing authority for Virtual Asset Service Providers (VASPs).
    • Enforces Anti-Money Laundering (AML), Counter-Terrorism Financing (CTF), and Travel Rule standards.
    • Provides guidance and warnings to the public regarding cryptocurrency investments.
  • Reserve Bank of Vanuatu (RBV):
    • Historically issued warnings against cryptocurrency trading (pre-2025).
    • Cryptocurrencies are not recognized as legal tender.
    • Role now primarily focused on broader financial stability.

III. Important Legislation and Regulations:

  • Virtual Asset Service Provider (VASP) Act (March 2025):
    • Establishes a legal framework for digital assets and cryptocurrency-related businesses.
    • Mandates licensing for cryptocurrency exchanges, custody providers, NFT marketplaces, and ICOs.
    • Empowers the VFSC to regulate and oversee the digital asset sector.
  • Anti-Money Laundering and Counter-Terrorism Financing Act No. 13 of 2014:
    • Applicable to VASPs, requiring compliance with AML/CTF regulations.
  • Financial Dealers Licensing (Amendment) Act No. 9 of 2021:
    • Previously used to regulate digital asset dealers via Class D licenses.
    • Now superseded by the VASP Act but indicates the historical regulatory direction.

IV. Requirements for Compliance (for VASPs):

  • Licensing: Companies offering cryptocurrency services must obtain a license from the VFSC.
  • KYC/AML Procedures:
    • Customer Due Diligence (CDD).
    • Enhanced Customer Due Diligence (ECDD) where required.
    • Transaction monitoring.
    • Reporting suspicious activities.
  • FATF Compliance: Adherence to Financial Action Task Force (FATF) recommendations, including the Travel Rule.
  • Record Keeping: Maintaining records of digital asset transactions and Ultimate Beneficial Owners (UBOs).

V. Notable Restrictions or Limitations:

  • No Legal Tender Status: Cryptocurrencies are not legal tender in Vanuatu.
  • Lack of Statutory Compensation: Investments in virtual assets are not protected by any statutory compensation arrangements in Vanuatu.
  • VFSC Warnings: The VFSC advises caution for retail investors and emphasizes the high-risk nature of cryptocurrency investments.
    • Virtual assets are considered more suitable for sophisticated or expert investors.

VI. Recent Developments or Changes:

  • Shift to Regulated Environment (March 2025): The VASP Act represents a significant shift from a largely unregulated environment to a formally regulated one.
  • VFSC as Primary Regulator: The VFSC is now the primary regulatory body for digital assets.
  • Focus on AML/CTF: Increased emphasis on AML/CTF compliance for cryptocurrency businesses.

VII. Important Considerations for Retail Investors:

  • High Risk: Cryptocurrency investments are considered high risk.
  • Due Diligence: Retail investors should conduct thorough research and understand the risks before investing.
  • Limited Protection: Investments are not protected by statutory compensation arrangements.
  • Use Licensed VASPs: Transact through VASPs that are licensed and regulated by the VFSC.

Full Analysis Report

Report on the Current Status of Retail Trading in Vanuatu

Date: 2025-06-26

Topic: Retail_Trading_Status

Description: Assess whether individual citizens and residents in the country are legally permitted to buy, sell, and hold cryptocurrencies. Detail the regulatory environment surrounding this activity (e.g., KYC/AML requirements imposed on platforms, general warnings issued).

1. Identified Current Status: Allowed-Regulated

2. Detailed Narrative Explanation:

Vanuatu has recently moved towards a regulated environment for cryptocurrencies. In March 2025, the Parliament of Vanuatu passed the Virtual Asset Service Provider (VASP) Act. This Act establishes a legal framework for digital assets and cryptocurrency-related businesses, designating the Vanuatu Financial Services Commission (VFSC) as the licensing authority. The VASP Act empowers the VFSC to enforce Anti-Money Laundering (AML), Counter-Terrorism Financing (CTF), and Travel Rule standards in line with the Financial Action Task Force (FATF) recommendations.

This means that while retail trading of cryptocurrencies by individual citizens and residents is permitted, it falls under a new regulatory regime. Companies offering cryptocurrency exchange, custody, and other related services must obtain a license from the VFSC and adhere to specific operational and compliance requirements. These requirements include implementing KYC/AML procedures, such as customer due diligence, transaction monitoring, and reporting suspicious activities.

Historically, the Reserve Bank of Vanuatu (RBV) had issued warnings against cryptocurrency trading. In 2017, the RBV strongly advised the public and financial institutions to refrain from engaging in Bitcoin or other cryptocurrency trading, stating that cryptocurrencies were not recognized as legal tender and posed significant risks. An August 2021 press release from the VFSC reiterated that cryptocurrencies are not legal tender in Vanuatu and warned retail investors about the risks, stating that such investments were not protected by any statutory compensation arrangements. The VFSC also noted that at that time, no Class D licenses for digital asset dealers had yet been issued.

The new VASP Act of March 2025 signifies a shift from a largely cautionary and unregulated stance to a formally regulated environment. However, it's important to note that even with this new regulatory framework, the VFSC continues to advise caution for retail investors. The Commission has stated that it "does not recommend them for retail investors without thorough understanding of the associated risks" and emphasizes that investments in virtual assets are not protected by any statutory compensation arrangements in Vanuatu. The VFSC suggests that virtual assets may be more suitable for sophisticated or expert investors and various types of investment schemes rather than the general retail public without adequate knowledge.

Therefore, individuals can legally buy, sell, and hold cryptocurrencies, but they will likely need to do so through VASPs that are licensed and regulated by the VFSC, adhering to KYC/AML and other compliance measures. The regulatory framework is new and aims to provide stability and oversight to the digital asset sector in Vanuatu.

3. Specific, Relevant Text Excerpts:

  • Vanuatu Financial Services Commission (VFSC) via CoinGeek (April 2025): "Vanuatu has passed a bill to institute a regulatory regime for digital assets, including a licensing and reporting framework for exchanges, non-fungible token (NFT) marketplaces, digital asset custody providers and initial coin offerings (ICOs). The South Pacific Island nation's Parliament passed the “Virtual Asset Service Provider (VASP) Act” on March 26."
  • Vanuatu Financial Services Commission (VFSC) via CoinGeek (April 2025): "Amongst other measures, the framework designated the Vanuatu Financial Services Commission (VFSC) as the licensing authority, with powers to enforce the Financial Action Task Force's (FATF) Anti-Money Laundering, Counter-Terrorism Financing and Travel Rule standards on digital asset firms."
  • Vanuatu Financial Services Commission (VFSC) Statement (March 29, 2025, as reported by CoinGeek): “Economically, the VASP Act establishes a stable regulatory framework for digital business transactions... opens numerous opportunities for Vanuatu, both economically and socially, while ensuring that international standards are adhered to.”
  • Vanuatu Financial Services Commission (VFSC) via press release (April 2025): "While the VASP Act creates a legal framework for virtual assets, the VFSC wishes to caution the public that investments in virtual assets and cryptocurrencies are not protected by any statutory compensation arrangements in Vanuatu. Due to the high-risk nature of these investments, the VFSC does not recommend them for retail investors without a thorough understanding of the associated risks."
  • Cointelegraph (March 2025): "The local parliament passed the Virtual Asset Service Providers Act on March 26, giving crypto licensing authority to the Vanuatu Financial Services Commission (VFSC) along with powers to enforce the Financial Action Task Force's Anti-Money Laundering, Counter-Terrorism Financing and Travel Rule standards with crypto firms."
  • Invezz (April 2025): "Under the new law, crypto firms, including exchanges, NFT marketplaces, custody providers, and ICO projects, must register and operate under a licensing regime that offers various classes of licences based on the nature and scale of services provided."
  • Vanuatu Financial Services Commission (VFSC) Guidance Notes on Digital Assets (undated, but referencing the Financial Dealers Licensing (Amendment) Act No. 9 of 2021): "A holder of Class D license must ensure full compliance with the Anti- Money Laundering and Counter -Terrorism Financing Act No. 13 of 2014. This includes applying KYC principals such as CDD and ECDD when required and details of UBO of digital assets being traded must be kept on record and provided to VFSC." (Note: This older guidance pre-dates the 2025 VASP Act but indicates the direction towards regulated AML/KYC for digital asset licensees.)
  • Reserve Bank of Vanuatu (RBV) Press Release (October 2017): "RBV therefore strongly advises that all corporate, financial institutions, public enterprises, and individual customers and public at large refrain from involving themselves in cryptocurrency business with immediate effect." (Historical context)
  • Vanuatu Financial Services Commission (VFSC) Press Release (August 2021): "VFSC is informing the Public that Investment into Digital Asset and Cryptocurrencies is not protected by any statutory compensation arrangement in Vanuatu. Given the high-risk nature of Investment, the VFSC consider that Cryptocurrencies may not be suitable for investment by retail investors at this stage." (Historical context)

4. Direct, Accessible URL Links to Specific Sources:

Web Sources (19)

Sources discovered via web search grounding

Search queries used (5)
  • Vanuatu cryptocurrency regulation retail investors
  • Vanuatu Financial Services Commission cryptocurrency rules
  • Reserve Bank of Vanuatu cryptocurrency policy
  • Vanuatu crypto trading laws for individuals
  • AML/KYC requirements for crypto exchanges Vanuatu
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