Regulatory framework for crypto custodian license coming to Mauritius

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Following up on a report by the Regulatory Committee on FinTech and Innovation-Driven Financial Services, the Financial Services Commission (FSC) has taken another step toward making the Mauritius International Financial Centre (Mauritius IFC) Africa’s fintech hub.

Digital assets were recognized as asset class for investment on September 17, 2018, and that was followed by a consultation paper that sought feedback from stakeholders and the public regarding regulatory framework for the Custodian Services (Digital Asset) License. This will allow its holder to offer custody services for digital assets.

The regulations will come into effect on March 1, 2019, making the Mauritius IFC the world’s first regulated jurisdiction for the custody of digital assets, according to the government agency. Those who possess the Custodian Services (Digital Assets) License will need to comply with anti-money laundering/combating the financing of terrorism (AML/CFT) framework in keeping with international best practices. One of the requirements they will need to meet is a minimum reserve of 500,000 Mauritius rupees ($14,600). They will also be required to maintain a board consisting of no less than three participants with one of them being a Mauritius resident. A physical office must operate within the country.

Holders will be considered ‘financial institutions’ and as such, they will have to enforce anti-money laundering provisions such as know your customer programs like any mainstream financial institution. Custodian services protect cryptocurrency holdings on behalf of an institution’s investors. The regulations were drafted to specifically address cryptocurrency custodian services at a time when demand for custodian services is on the rise because of more institutional and regulated investors beginning to invest in cryptocurrencies. There has already been a lot of interest in applying for the license.

The island nation boasts established financial services as well as information and communications technology. It only seems logical that blockchain and financial technology comes next. A recent “Doing Business” survey conducted by the World Bank found that Mauritius has the most business-friendly climate in the region. The rankings consider such things as the ease of starting a business, enforcement of contracts, obtaining credit, and protection for investors.

The FSC’s chief executive, Harvesh Seegolam stated, “The FSC is committed to implementing enabling frameworks which facilitate the development of the Mauritius IFC.” He then acknowledged the active participation of all parties that took part in the consultation phase that occurred prior to the introduction of the new framework.