Seychelles is facing a major judgement regarding the legal status of crypto-trading platforms.

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“Cryptocurrencies developed quite fast, but the laws of many countries are not up to date with this type of activity”

Seychelles’ finance ministry and capital market regulator are now working on a crypto-policy framework, according to local reports. The island nation is on its way to either prohibit or license crypto-trading platforms as registered international businesses.

The development follows several trading scams, as well as the continuing investigation into the $10 billion OneCoin scam. Since the parent business was registered in Seychelles, the country’s financial crime investigation unit is looking into the transfer of 230,000 Bitcoins.

However, it is frequently difficult to determine where these businesses are located. Randolf Samson, Director of the National Anti-Money Laundering and Counter-Terrorism Financing Committee (NAC), informed reporters that cryptocurrency platforms register in Seychelles as International Business Companies (IBC).

Even so, he added, the actual activity happens online and often outside its jurisdiction. The exec went on to say,

“The reason why they use Seychelles is because we do not have a framework that would otherwise discourage them.”

According to the official, trading platforms can be licensed only after a detailed risk assessment. On the contrary, they can face a banning order if more risks than benefits are found in the assessment.

“If the incorporation or licensing brings too much risks and bad reputation, we will simply prohibit the activity.”

Ergo, there is a good reason why the country’s administration is clamping down on illicit activities by companies registered in its jurisdiction, Samson concluded.

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Currently, the jurisdiction is underregulated and cryptocurrencies are not treated as a currency to be regulated by the central bank. Despite the fact that the country has only one crypto-exchange, over 40 ICO campaigns are located in the region. What’s more, while the status of cryptocurrencies remains sticky, a Cointobuy survey recently scored Seychelles 2.7/10 on safety.

Previously, the glorified tax haven was accused of harbouring crypto-businesses such as Binance, BitMEX, KuCoin, Bilaxy, and OKEx.

Meanwhile, the Financial Services Authority of Seychelles (FSA) has been warning investors on its website about unlawful investments and scams. Furthermore, the new regulation is expected to bring Seychelles up to Financial Action Task Force (FATF) standards.

A 2021 report by the FATF and OECD placed the island nation in the category of non-complaint or partially compliant nations.

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