FSC Mauritius issues Guidance Notes on Stablecoins

Why has the FSC issued specific Guidance Notes on Stablecoins? 

Stablecoins have become a core part of the global virtual asset ecosystem. They are frequently used as a settlement asset on exchanges, as a bridge between fiat currency and virtual assets, for cross-border transfers, for treasury management and increasingly within decentralised finance and tokenised financial-market structures. 

While their objective is generally to maintain a stable value relative to a reference asset, stablecoins can create risks that differ materially from those associated with conventional cryptocurrencies. These include de-pegging risk, reserve and liquidity risk, redemption risk, custody and counterparty risk, operational and technology risk, governance risk and, in certain structures, risks to payment-system or financial-system stability. 

The FSC’s 2026 publication therefore moves the regulatory treatment of stablecoins from a broad virtual asset framework into a more specific supervisory framework. The Commission expressly notes the need to update regulatory standards so that digital assets and innovative technologies can be integrated into financial services and payment systems in a responsible manner.

How do stablecoins fit within the Mauritius VAITOS framework? 

The VAITOS Act is the principal legislative framework governing virtual asset services and initial token offerings in Mauritius. The FSC is the regulator responsible for licensing and supervising Virtual Asset Service Providers (VASPs) and registering issuers of Initial Token Offerings. 

The regulatory treatment of a stablecoin is not determined solely by the label attached to the token. The underlying design, rights of holders, reserve structure, intended use and activities carried out by the operator remain central. This is consistent with a substance-over-form approach: a token designed for payments, investment, exchange, transfer or custody may trigger different regulatory considerations depending on the facts and the services being offered. 

For service providers, the relevant VAITOS permissions may include, among others, exchange between virtual assets and fiat currencies or between virtual assets, transfer of virtual assets, safekeeping or administration of virtual assets, advisory-related services, or operation of a virtual asset marketplace. A business supporting stablecoins should therefore map each part of its operating model to the applicable VAITOS licence class rather than assuming that stablecoin activity falls outside the existing licensing perimeter.

What does the new Guidance cover?

1. Issuance, distribution and facilitation

The Guidance Notes address not only the issuer of a stablecoin, but the broader stablecoin arrangement. This is significant for exchanges, broker-dealers, wallet providers, custodians and platforms that may facilitate stablecoin transactions without themselves creating the token. 

Accordingly, a Mauritius operator should assess whether its role in listing, exchanging, transferring, custodying, distributing or otherwise facilitating a stablecoin is covered by its existing regulatory permissions, approved business plan and operating procedures.

2. Reserve asset management and prudential safeguards

Reserve backing is one of the central prudential issues in a stablecoin arrangement. The FSC’s framework focuses on whether the assets supporting the stablecoin are sufficient, liquid, appropriately managed and protected. The quality and composition of reserves, the arrangements for holding them and the ability to meet redemption demands are therefore expected to form part of the regulatory assessment. 

For issuers, this increases the importance of documented reserve-management policies, clear segregation arrangements, credible banking and custody relationships, valuation controls, liquidity planning and independent verification or assurance over reserve assets. 

3. Redemption rights

A stablecoin’s credibility ultimately depends on the mechanism by which holders can convert the token into the referenced value. The Guidance therefore places redemption rights and processes within the regulatory framework. Issuers and relevant service providers should be able to explain who has a right of redemption, against whom that right may be exercised, the applicable timeline, any fees or conditions, and how redemptions would continue during periods of market stress. 

4. Governance and risk management

Stablecoin arrangements require more than a technology solution. The FSC expressly identifies governance and risk management as key elements of the regime. Boards and senior management should therefore understand the stablecoin model, approve the related risk appetite and policies, and ensure that responsibilities for reserve management, custody, technology, compliance and incident response are clearly allocated. 

Risk assessments should specifically address de-pegging, concentration, liquidity, counterparty, smart-contract, blockchain, cyber, operational, sanctions, financial-crime and business-continuity risks. Where third parties perform critical functions, outsourcing and dependency risks should also be considered.

5. Custody arrangements

The custody of both the stablecoin itself and the reserve assets supporting the stablecoin is a material regulatory consideration. Operators should be able to demonstrate appropriate segregation, access controls, wallet governance, key-management arrangements and due diligence over custodians and banking counterparties. 

6. Disclosure and transparency

The FSC also highlights disclosure obligations. Users should be provided with information that is sufficiently clear to understand how the stablecoin is designed, what supports its value, the rights attached to it, the redemption mechanism, the principal risks and the parties involved in the arrangement. 

This means that white papers, client disclosures, product descriptions, websites and marketing material should be consistent with the legal and operational reality of the stablecoin. Statements such as ‘fully backed’, ‘redeemable’, ‘safe’ or ‘stable’ should be capable of objective substantiation. 

A restrictive approach to higher-risk stablecoin models 

One of the most important developments in the final framework is the FSC’s conservative approach to stablecoin models that depend on algorithmic stabilisation or that embed yield into the stablecoin structure. The final Guidance has been publicly reported as providing that the FSC will not consider applications for the issuance, distribution or facilitation of algorithmic or yield-bearing stablecoins in or from Mauritius. 

For promoters, this is a material structuring point. A proposal that is described commercially as a stablecoin may need to be redesigned if its stability mechanism, reserve structure or return features fall outside the types of arrangements the FSC is prepared to supervise. 

Interaction with the Bank of Mauritius 

Stablecoins also sit close to the boundary between virtual assets and payment services. The FSC’s communiqué emphasises the integration of digital assets into financial services and payment systems, and current reporting on the final Guidance confirms that a stablecoin intended to be offered as a payment instrument in Mauritius may also engage the National Payment Systems Act and the regulatory remit of the Bank of Mauritius. 

This means that a promoter should not consider the FSC or VAITOS analysis in isolation. Where a stablecoin is intended for domestic payment use, settlement or a payment-service proposition, the regulatory perimeter should be assessed across both the FSC and Bank of Mauritius frameworks before the product is launched. 

What are the implications of the new Guidance Notes? 

A practical compliance response for VAITOS operators 

Following the publication of the Guidance Notes, Mauritius VASPs and applicants should consider carrying out a targeted stablecoin gap analysis. At a minimum, this should cover: 

• Mapping all stablecoins used, listed, transferred, custodied or accepted within the business model. 

• Classifying the firm’s role for each stablecoin and confirming that the relevant VAITOS permission covers the activity. 

• Performing and documenting a virtual-asset risk assessment for each stablecoin or stablecoin category. 

• Reviewing issuer, reserve, redemption, governance, attestation, legal and counterparty information. 

• Establishing controls for de-pegging events, issuer distress, reserve concerns, blockchain disruption and liquidity stress. 

• Reviewing custody, wallet governance, private-key controls and third-party service-provider arrangements. 

• Updating client disclosures and terms so that stablecoin-specific risks and redemption limitations are clearly explained. 

• Ensuring AML/CFT, sanctions, transaction monitoring and Travel Rule processes appropriately cover stablecoin flows. 

• Checking whether the use case may constitute or involve a payment instrument or payment service requiring Bank of Mauritius analysis. 

• Updating the business plan, compliance manual, risk-management framework and board-approved product governance documents where necessary. 

SALVUS view: regulatory clarity, but with higher expectations 

The publication is a positive development for Mauritius’ virtual asset sector. It gives promoters and regulated operators a clearer basis on which to design stablecoin-related products and demonstrates the FSC’s intention to support responsible innovation while protecting investors and the stability of the financial system. 

At the same time, the Guidance makes clear that stablecoins should not be treated as a low-risk substitute for fiat currency merely because they seek to maintain a peg. The regulatory assessment now extends beyond the token itself to the quality of the reserve, the enforceability and operation of redemption rights, the resilience of the custody and technology infrastructure, the governance of the issuer and the role played by intermediaries across the arrangement. 

For market participants, the practical message is straightforward: stablecoin activities should be deliberately designed, documented and governed. For applicants, the framework should be addressed from the outset of the licensing process rather than after the FSC raises queries on the business model. 

How SALVUS can assist 

SALVUS supports virtual asset businesses with Mauritius VAITOS licensing, regulatory structuring, stablecoin and virtual-asset risk assessments, business plans, compliance and risk-management frameworks, governance documentation, FSC applications and post-licensing regulatory support. 

For further information, contact us at info@salvusfunds.com or visit www.salvusfunds.com