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FameEX Hot Topics | Cryptocurrency Regulations: Seychelles Government Working on a National Policy for Virtual Assets

2023-04-05 15:49:40

According to a recent national risk assessment carried out by the Financial Services Authority (FSA), Seychelles has seen an increase in complaints related to cryptocurrency activities. Ali Hassan, CEO of FSA, noted that the financial sector has undergone a transformation in recent years, with cryptocurrencies gaining popularity as a method of payment. Despite some international and Seychellois companies engaging in cryptocurrency activities, Seychelles' Central Bank does not recognize cryptocurrency as legal tender, and individuals who trade in it do so at their own risk.

Investors who have lost their money or investments through cryptocurrencies have filed complaints with the FSA. In 2018, the FSA received 28 complaints, five of which were related to cryptocurrency activities. In 2019, there were 27 complaints, nine of which were related to cryptocurrency, and in 2020, the FSA recorded 12 cases, eight of which were related to cryptocurrency. In 2021, there were 27 cases, and 23 of them were related to cryptocurrency. This increase in complaints indicates that more Seychellois and businesses are showing interest in cryptocurrency activities.

Hassan added that local and international organizations such as the Financial Intelligence Unit (FIU) and the police force's unit that investigates financial crimes (FCIU) have been requesting information on companies registered in Seychelles that engage in illegal activities using cryptocurrency. Between January 1, 2019, and March 31, 2021, FIU recorded 187 information requests on companies, while FCIU recorded 44 requests for assistance with company investigations.

In response to these concerns, the Seychelles government, through the FSA, carried out a national risk assessment on virtual assets and businesses that provide services using virtual assets to understand the current state and associated risks. The exercise was conducted in the first half of 2022 with the help of an expert recommended by the World Bank. Since there is currently no framework, investors or individuals using virtual assets have no legal protection. The national framework's objectives are to establish legal provisions to register businesses engaging in virtual asset activities as soon as possible and create licensing provisions based on the types of activities permitted in Seychelles. The national framework aims to address concerns and provide legal protection for investors and users of virtual assets in Seychelles.

Disclaimer: The information provided in this section is for informational purposes only, doesn't represent any investment advice or FameEX's official view.

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