The Financial Services Commission, Mauritius (FSC) has issued the Guidance Notes on Stablecoins under its Fintech Series pursuant to section 7(1)(a) of the Financial Services Act 2007 and section 6(1)(d) of the Virtual Asset and Initial Token Offerings Services Act 2021. This is according to a press release published on August 13.
In line with the increasing role played by digital assets and innovative technologies in financial services, the FSC informs that it recognises the importance of updating regulatory standards to help allow the integration of digital assets and innovative technologies in financial services and payment systems.
The Guidance Notes establish a clear and robust regulatory regime for stablecoins in Mauritius, taking into account industry stakeholder feedback, regulatory coordination and alignment with relevant international standards applicable to stablecoins arrangements.
The Guidance Notes inter alia provide for the issuance, distribution and facilitation of stablecoins transactions, reserve asset management, redemption rights, governance, risk management, custody arrangements, disclosure obligations and prudential safeguards. A robust regulatory framework for stablecoins is deemed essential to support responsible innovation in the virtual asset ecosystem, enhance investor protection and safeguard the integrity and stability of the financial services sector.
The document states that the usage of stablecoins has seen a rapid surge in recent years, considered originally safe in relation to the volatility of other virtual assets, and were used as an entry point for trading in virtual assets. However, with the rise in decentralised finance (DeFi) applications, stablecoins are being used for several other purposes and can impact risks to the financial system.
The financial services regulator informs that the FSC may direct any licensee or any other person to comply with these Guidance Notes, and failure to do so may entail regulatory actions and constitutes an offence. Moreover, no person shall issue and provide stablecoin-related services in or from Mauritius, holding the relevant licence and/or registration under the VAITOS Act, without the relevant ‘no-objection’ or relevant licence from the Bank of Mauritius.
Moreover, the Guidance Notes do not derogate from the obligation of any person under the Financial Services Act, the National Payment Systems Act, or any other enactment.
Any person who intends to offer a stablecoin as a payment instrument in Mauritius will be required to hold a relevant licence issued by the Bank of Mauritius under the National Payment Systems Act.
