For Vanuatu, the future of financial services has already begun in the form of a recently gazetted amendment that formalizes the use of digital assets for licensed financial dealers. The freshly minted legislation, [Financial Dealers Licensing, 22/07/2021], allows for the “service of distribution, secondary trading, custodial storage, provision of investment advice or other services in relation to digital assets.”
Though digital assets themselves have been a hotly-contested issue in the past few years, a period of deliberation and structured evaluation led Vanuatu to reconsider and overturn an initial ban. Digital assets rely on a distributed, secure ledger, such as blockchain technology, and can be used to represent land, stocks, or other traditional commodities, but their most widespread use is for currencies.
AJC sees the passage of this legislation as a way for financial dealers to work at the forefront of an innovative, versatile asset class and, further, to potentially set the stage for the future of commerce in Vanuatu.
Martin St-Hilaire, chairman of the Financial Markets Association of Vanuatu, noted, “this type of forward-thinking decision came at the right time, and it presents a unique opportunity for Vanuatu to take the lead on the world stage.”
For Vanuatu, official support came through examples of the real-world uses of digital assets and virtual currencies—most notably, Oxfam’s 2020 ‘Unblocked Cash Project,’ which utilized a digital token to give immediate relief for Vanuatu residents affected by Cyclone Harold.
The resulting legislation works to expand the possibilities for licensed companies in Vanuatu as well as to bring forth a new avenue of sustainable economic growth. As a collaborative effort, its journey to becoming gazetted required support and insight from the Chamber of Commerce and Industry (VCCI) in addition to parliament members themselves.
“It’s important to stay anchored in the community in both the development and the implementation of regulations that push Vanuatu forward,” added St-Hilaire.
Could the next legislative step be a digital currency for day-to-day use in Vanuatu? AJC certainly hopes so, as we argued in our position paper The case for digitizing the Vatu.
While the legislation works to help the global community move in step with the country’s development, one key addition is that it has also made operating in Vanuatu more accessible to foreign licensed financial dealers.
International companies can now nominate a representative on the ground in Vanuatu — one way being through AJC — to satisfy the requirements of the law. As such, companies are able to continue to conduct business from afar while maintaining meaningful representation in the country, thus allowing them to make the most of the continued opportunities in the investment and financial services world coming to Vanuatu. Please contact us for more information on how to conform to the new requirements.