Seychelles’ Financial Services Authority (FSA) together with the country’s finance ministry, is reportedly working on a policy to either prohibit or license crypto trading platforms as registered international businesses.
Increase in International Investigations of Crypto Platforms
According to a report, the move by the FSA happens against the backdrop of a rising number of international investigations into scam crypto trading platforms that have been traced to the island nation. As recently reported by Bitcoin.com News, the Onecoin bitcoin scam became the latest foreign crypto entity to be a target of such an investigation. This after a request for a probe was submitted to the country’s law enforcement.
Meanwhile, in the same report, Randolf Samson, who heads the FSA’s anti-money laundering and terrorist financing section, is quoted explaining the rationale behind the regulator’s move. Samson detailed:
There are many incorporated companies that are facilitating that activity. The reason why they are using Seychelles is because we do not have a framework that would otherwise discourage them. Cryptocurrency developed quite fast but the laws of many countries are not up to date with this type of activity.
Nevertheless, Samson insists that “a risk assessment needs to be carried out to look at the pros and cons” before any final decision is made. Therefore, if the outcome of the so-called risk assessment points to potential benefits for Seychelles, then such trading companies will be licensed, explained Samson.
On the other hand, if the incorporation or licensing of cryptocurrency trading platforms “brings too much risks and bad reputations, we will simply prohibit the activity.”
Crypto’s Growing Popularity
Still, Samson concedes that a decision that results in the prohibition of crypto trading in Seychelles could prove to be an unpopular one. Samson said:
“The problem with cryptocurrency, the way things are going, you will have to take a stance as it is popular among a growing number of people and other countries are taking options to regulate this activity.”
However, if the policy to license crypto trading businesses is adopted, Seychelles will be forced to take on the responsibility of ensuring that individuals and companies are not involved in illicit activities. In any case, such a policy “will also put Seychelles in line with recent Financial Action Task Force (FATF) amendments made in June 2020,” the report concludes.
Should Seychelles license crypto trading platforms that are not based on the island? Tell us what you think in the comments section below.
In March, FSA suspended two exchanges – the Nagoya-based Bit Station and again FSHO, which was ordered to terminate services until April 7. The agency said its operator was not performing thorough checks on large-scale transactions and had not implemented necessary measures “to run the exchange in a decent and assured way”. According to Japanese press, Bit Station was penalized because its senior officials were implicated in embezzlement of clients’ crypto deposits. Similar charges have led to the arrests of four high-ranking representatives of two cryptocurrency exchanges in South Korea.
Cryptocurrency theft has become a major security issue in Japan, part of the growing cybercrime trend. Last year alone, $6.3 million worth of cryptocurrency was stolen, and that’s before the Coincheck hack.