Cook Islands
Retail_Trading_Status
- Analysis ID
- #634
- Version
- Archived
- Created
- 2025-12-12 04:05
- Run
- 12d79933...
- History
- View all versions
- Workflow Stage
- Step 1
Executive Summary
Retail cryptocurrency trading in the Cook Islands currently operates in a regulatory 'gray area,' a status explicitly acknowledged by the Financial Supervisory Commission (FSC). While there is no explicit ban on holding or trading digital assets, the existing 'Money-Changing and Remittance Businesses Act 2009' is outdated and does not formally cover crypto-asset service providers, leaving them unregulated. The FSC has released a 'Draft Money & Payment Services Policy' to modernize the framework and introduce licensing for crypto transfers, but until this is enacted, no specific licensing regime exists. Additionally, the government recently withdrew the controversial 'Tainted Cryptocurrency Recovery Bill 2023' following backlash over privacy and due process concerns.
Key Pillars
Financial Supervisory Commission (FSC) - Primary financial regulator responsible for licensing and supervision.
Financial Intelligence Unit (FIU) - Responsible for Anti-Money Laundering (AML) and Counter-Terrorism Financing (CFT) enforcement.
Draft Money & Payment Services Policy - Proposed framework to bring crypto-asset transfers under formal regulation.
Financial Transactions Reporting Act 2017 - General AML framework that applies to 'value transfer' services, though specific crypto application is currently ambiguous.
Landmark Laws
Money-Changing and Remittance Businesses Act 2009 (Act No. 16 of 2009) - Enacted: 2009-01-01
- The current law governing money services. The FSC has stated this act is 'outdated' and that fintech/crypto solutions currently 'operate in a gray area or not at all' under this framework.
- Source
Financial Transactions Reporting Act 2017 (Act No. 3 of 2017) - Enacted: 2017-06-08
- Primary AML/CFT legislation. Requires reporting institutions to conduct customer due diligence and report suspicious transactions. While it covers 'transfer of money or value', it lacks specific definitions for virtual asset service providers (VASPs).
- Source
Tainted Cryptocurrency Recovery Bill 2023 (Withdrawn) (Bill 2023)
- A controversial bill drafted by a private US firm intended to allow the seizure of 'tainted' cryptocurrency. It was withdrawn in late 2024/early 2025 due to concerns it validated hacking and lacked due process.
Considerations
Regulatory Gap: The FSC explicitly states that crypto-asset transfers currently operate in a 'gray area' due to outdated definitions in the 2009 Act.
False Licensing Claims: The FSC has issued public warnings against forex and crypto brokers falsely claiming to be licensed in the Cook Islands.
Asset Protection: The Cook Islands is a major jurisdiction for asset protection trusts, which are increasingly used to hold cryptocurrency keys, distinct from retail trading regulation.
Banking Access: Local banks may be hesitant to process crypto transactions given the lack of a clear regulatory framework.
Notes
The Cook Islands is distinct from the Cayman Islands or BVI in that it has not yet implemented a dedicated VASP Act, though it is in the planning stages. The jurisdiction is more famous for its asset protection trusts, which are frequently used for holding crypto wealth, but this is a matter of trust law rather than financial services regulation.
Remaining Uncertainties
- When will the new 'Money & Payment Services' legislation be enacted?
- Will the new legislation impose a retroactive licensing requirement on existing offshore entities?
- Does the FIU currently enforce STR reporting for crypto under the generic 'value transfer' clause of the 2017 Act?
Full Analysis Report
Full Analysis Report
The regulatory status of cryptocurrency in the Cook Islands is best classified as 'Gray-Zone'. This determination is driven by the Financial Supervisory Commission's (FSC) own admission in its 'Draft Money & Payment Services Policy' that fintech and crypto-asset solutions currently 'operate in a gray area or not at all' because the existing Money-Changing and Remittance Businesses Act 2009 was drafted before digital assets were prevalent. Consequently, while there is no criminal ban on residents buying or selling Bitcoin, there is also no legal pathway for exchanges to obtain a license to operate domestically.
The primary regulator, the FSC, has taken a cautious but active approach. They have issued multiple warnings regarding offshore entities falsely claiming to hold Cook Islands licenses for forex and crypto trading. This indicates that while the activity is not illegal, the regulator is keen to prevent the jurisdiction from being used for reputational laundering by unregulated entities. The Financial Intelligence Unit (FIU) monitors for money laundering risks under the Financial Transactions Reporting Act 2017, but the lack of explicit VASP (Virtual Asset Service Provider) terminology in the primary law creates a compliance gap that the new draft policy aims to close.
A significant recent development was the introduction and subsequent withdrawal of the Tainted Cryptocurrency Recovery Bill 2023. Drafted with the assistance of a private US debt recovery firm, the bill aimed to position the Cook Islands as a hub for recovering stolen crypto assets globally. However, it faced intense criticism from legal experts and the public for potentially authorizing 'state-sponsored hacking' and bypassing due process. Its withdrawal signals that while the government is interested in the crypto sector, it is wary of legislation that could damage its international reputation or human rights standing.
Looking forward, the Cook Islands is moving toward an 'Allowed-Regulated' status. The proposed 'Money & Payment Services' framework intends to explicitly capture crypto-asset transfers and align the country with FATF Recommendation 15. Until this legislation is passed and licenses are actually issued, however, the sector remains in a regulatory limbo where retail trading is tolerated but unsupported by consumer protection laws.
The regulatory status of cryptocurrency in the Cook Islands is best classified as 'Gray-Zone'. This determination is driven by the Financial Supervisory Commission's (FSC) own admission in its 'Draft Money & Payment Services Policy' that fintech and crypto-asset solutions currently 'operate in a gray area or not at all' because the existing *Money-Changing and Remittance Businesses Act 2009* was drafted before digital assets were prevalent. Consequently, while there is no criminal ban on residents buying or selling Bitcoin, there is also no legal pathway for exchanges to obtain a license to operate domestically. The primary regulator, the FSC, has taken a cautious but active approach. They have issued multiple warnings regarding offshore entities falsely claiming to hold Cook Islands licenses for forex and crypto trading. This indicates that while the activity is not illegal, the regulator is keen to prevent the jurisdiction from being used for reputational laundering by unregulated entities. The Financial Intelligence Unit (FIU) monitors for money laundering risks under the *Financial Transactions Reporting Act 2017*, but the lack of explicit VASP (Virtual Asset Service Provider) terminology in the primary law creates a compliance gap that the new draft policy aims to close. A significant recent development was the introduction and subsequent withdrawal of the *Tainted Cryptocurrency Recovery Bill 2023*. Drafted with the assistance of a private US debt recovery firm, the bill aimed to position the Cook Islands as a hub for recovering stolen crypto assets globally. However, it faced intense criticism from legal experts and the public for potentially authorizing 'state-sponsored hacking' and bypassing due process. Its withdrawal signals that while the government is interested in the crypto sector, it is wary of legislation that could damage its international reputation or human rights standing. Looking forward, the Cook Islands is moving toward an 'Allowed-Regulated' status. The proposed 'Money & Payment Services' framework intends to explicitly capture crypto-asset transfers and align the country with FATF Recommendation 15. Until this legislation is passed and licenses are actually issued, however, the sector remains in a regulatory limbo where retail trading is tolerated but unsupported by consumer protection laws.
Source Evidence
Primary and secondary sources cited in this analysis
"As a result, fintech solutions like mobile money, online remittance apps, and crypto-asset-based transfers operate in a gray area or not at all."
"Crypto Coin Vent has never been licensed or regulated by the Cook Islands Financial Supervisory Commission, nor has it ever applied to be."
"An Act to help combat financial misconduct and the commission of serious offences by monitoring certain transactions."
"Cook Islands Government has withdrawn the Tainted Cryptocurrency Recovery Bill 2023 following widespread criticism."
"One increasingly popular way high-net-worth investors are trying to ring-fence digital wealth is by moving it into a Cook Islands trust."
Web Sources (11)
Sources discovered via web search grounding
Search queries used (9)
- Cook Islands Tainted Cryptocurrency Recovery Bill 2023
- Cook Islands cryptocurrency regulation Financial Supervisory Commission
- Cook Islands retail crypto trading legality
- Cook Islands Financial Transactions Reporting Act virtual assets
- Cook Islands VASP licensing requirements
- Cook Islands "Money-Changing and Remittance Businesses Act" cryptocurrency
- "Cook Islands" crypto exchange license FSC
- Cook Islands National Risk Assessment money laundering cryptocurrency
- Cook Islands Financial Transactions Reporting Act 2017 "virtual asset" definition
https://www.zitadelleag.com/news/www-zitadelleag-com-news-crypto-exchange-vasp-licenses-compared
https://www.fsc.gov.ck/documentation/fc/Cook%20Islands%20draft%20Money%20and%20Payment%20Services%20Policy.pdf
https://bbcincorp.com/offshore/news/cayman-islands-vasp-act-licensing-updates
http://www.amlc.gov.ph/images/PDFs/Main/Guidelines_on_Transaction_Reporting_and_Compliance_Submissions.pdf
https://medium.com/@beatrizrepiso/4xcube-review-is-it-a-good-forex-broker-18d9ee04827f
https://flagtheory.com/cryptocurrency-business-regulations/
https://www.fsc.gov.ck/Documentation/FC/Annual%20Report%20and%20Statutory%20Accounts%202021-2022%20(ID%2025219).pdf
https://www.rnz.co.nz/international/pacific-news/579813/draft-crypto-bill-under-review-as-concerns-loom-in-cook-islands
https://islandsbusiness.com/news-break/proposed-law-on-tainted-cryptocurrency-terrible-for-human-rights-says-cook-islands-expert/
https://invezz.com/stocks/best-trading-platforms/cook-islands/
https://www.apgml.org/sites/default/files/documents/2023_APG_Typologies_Report.pdf