Establishing a VASP under the VAITOS Act in Mauritius in 2024
Mauritius is recognized as a thriving international financial centre and an emerging FinTech hub. It distinguishes itself among the leading countries in the Eastern and Southern African regions by implementing robust legislation on Virtual Assets (VA) and Initial Token Offerings (ITO). This was achieved with the enactment of the Virtual Asset and Initial Token Offering Services (VAITOS) Act in early 2022.
The VAITOS Act empowers the Financial Services Commission (FSC) of Mauritius, to oversee and regulate Virtual Asset Service Providers (VASP) and ITO issuers functioning within the non-bank financial services sector in Mauritius. Consequently, any company aiming to engage in VA activities or ITO, either within or from Mauritius, shall require a license from the FSC. Authorised VASP are then required to operate within a robust prudential framework and adhere to sound market conduct guidelines.
In this article, the SALVUS Crypto Assets Licensing team provides essential information on the benefits and requirements of obtaining a license under the VAITOS Act in Mauritius. The article is divided into the following sections:
1. Why establish a VASP in Mauritius?
2. What is the VAITOS Act?
3. License categories and capital requirements
4. How SALVUS can support your VASP application
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1. Why establish a VASP in Mauritius?
A VASP operating in Mauritius enjoys the advantage of a strategic time zone facilitating business dealings across four different continents within a single day. Supported by a sophisticated and well-funded banking sector, including both local and international credit institutions, the country offers a comprehensive spectrum of services encompassing corporate banking and custodianship.
Mauritius is also known for its ease of doing business, ranking favourably in the World Bank’s Ease of Doing Business Index. This includes simplified procedures for company registration, licensing, and operational requirements. Furthermore, the government of Mauritius actively supports fintech and innovation, providing a conducive environment for VASP to thrive.
It is noteworthy that the VA and ITO framework in Mauritius largely aligns with the guidelines of Recommendation 15 concerning VA and VASP, introduced by the Financial Action Task Force (FATF). This provides VASP established in Mauritius, the credibility and accountability required for the establishment of business relationships across the globe.
2. What is the VAITOS Act?
The VAITOS Act establishes a robust and comprehensive framework for operators navigating the dynamic landscape of fintech in Mauritius. It not only sets a solid foundation but also ensures that the regulatory structure governing this asset class seamlessly aligns with international standards.
This extensive legislation and the rules published thereunder by the FSC, cover a wide array of crucial aspects, inter alia encompassing:
- technical prerequisites,
- governance structures,
- risk management protocols,
- disclosure requirements for VASP, and
- the protection of clients’ rights engaging with VA.
The VAITOS Act is specifically designed to ensure transparency, accuracy, and timeliness in disclosures by ITO issuers. To complement the VAITOS framework, the FSC of Mauritius has issued several rules to further enhance regulatory measures within the country. These rules cover:
- Capital and Financial Requirements: Establishing the capital and liquidity requirements the VASP entities must maintain, based on the nature, scale, and complexity of their activities.
- Client Disclosure: Outlining the information that must be communicated to clients in a clear, fair, and non-misleading manner.
- Custody of Client Assets: Requiring VASP to implement adequate arrangements for safeguarding clients’ ownership rights and preventing the misuse of clients’ virtual assets for the VASP’s own account.
- Cybersecurity: Implementing appropriate systems and controls to manage cybersecurity and operational risks resulting from inadequacies or failures in the VASP’s processes and systems.
- Publication of Advertisements: Setting general requirements and standards for advertisements and disclosures to be disseminated to the public.
- Risk Management: Mandating effective strategies, processes, and systems for the ongoing assessment and maintenance of sufficient financial and non-financial resources, own funds, and unimpaired capital.
- Statutory Returns: Specifying the information that must be disclosed to the FSC Mauritius, along with requirements for approval of material changes and annual reporting obligations.
- Travel Rule: Outlining the information that must accompany domestic or cross-border wire transfers or virtual asset transactions sent or received by VASP and intermediary VASP entities. This information primarily pertains to the originator, the beneficiary, and transaction specifics.
3. License categories and capital requirements
The FSC Mauritius authorises specific business activities for each class of license. The applicant has the option to apply for and obtain multiple classes of licenses. The table below outlines the business activities permitted under each license class, along with the minimum initial capital requirement.
| License category | Business activities | Capital requirements |
|---|---|---|
| Class M – Virtual Asset Broker Dealer | Any virtual asset service provider that conducts one or both of the following: • Exchange between virtual assets and fiat currencies, • Exchange between one or more form of virtual assets. | 2,000,000 MUR or its equivalent in any other fiat currency. |
| Class O – Virtual Asset Wallet Services | • Transfer of virtual assets. | Sufficient working capital in fiat currency to continue business for a period of 12 months, based on realistic forecasts for the business in different market conditions, both negative and positive scenarios. |
| Class R – Virtual Asset Custodian | • Safekeeping of virtual assets or instruments enabling control over virtual assets. • Administration of virtual assets or instruments enabling control over virtual assets. | 5,000,000 MUR or its equivalent in any other fiat currency. |
| Class I – Virtual Asset Advisory Services | • Participation in the provision of financial services related to an issuer’s offer and/or sale of virtual assets. | Sufficient working capital to be capable of meeting debts as they fall due. |
| Class S – Virtual Asset Market Place | • A Virtual Asset Exchange as a centralized or decentralized virtual platform, whether in Mauritius or in another jurisdiction which facilitates the exchange of VA or fiat currency or other VA on behalf of third parties for a fee, a commission, a spread or other benefit and which: • holds custody, or controls VA, on behalf of its clients to facilitate an exchange, or • purchases VA from a seller when transactions or bids and offers are matched in order to sell them to a buyer. | 6,500,000 MUR or its equivalent in any other fiat currency. |
| Issuers of Initial Token Offerings | • Issuance of Initial Token Offerings | Sufficient working capital to be capable of meeting debts as they fall due. |
If a VASP opts to apply for and acquire multiple licenses, it will be held accountable to meet the collective capital requirements stipulated for each individual license class it pursues. This means that the VASP must demonstrate the cumulative minimum capital amount mandated for all the classes of licenses it seeks to obtain from the FSC Mauritius.
4. How SALVUS can support your VASP application
The SALVUS Crypto Assets Licensing team employs a tailored project management approach, acknowledging the unique aspects of each licensing project. By understanding your business vision and objectives, we provide a carefully curated selection of license categories aligned with your business plan.
Drawing on our extensive experience with the FSC Mauritius, we efficiently gather all necessary information and prepare comprehensive documentation to ensure a robust application. Furthermore, we assist clients in optimizing their financial resource allocation by strategically combining in-house expertise, outsourcing agreements, and collaborations with third-party providers.
Contact us at info@salvusfunds.com if you are interested in obtaining a VASP license in Mauritius; our Crypto Assets Licensing team is ready to help you.
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The information provided in this article is for general information purposes only. You should always seek professional advice suitable to your needs.