Mauritius releases framework for security token offerings

The chief regulator of Mauritius has developed a regulated regime for a comprehensive security token ecosystem in the country

The Mauritian Financial Services Commission (FSC) recently released a framework designed specifically for security tokens. The local regulator explains that this, accompanied by a 16-page guidance document, is a part of a new licensing regime that enables fully regulated security token trading systems in the country.

The new regime would allow new security token trading systems to become eligible for licensing from the FSC. It effectively authorises a business to put a security token up for sale in an offering, dubbed as a Security Token Offering (STO), and also allows businesses to operate trading houses within the jurisdiction.

A spokesperson from the FSC revealed that this has been in the pipeline for over 18 months. The guidance marks the start of the country’s recognition for security tokens and the broader idea of cryptocurrencies as an asset class in their own right.

Dhanesswurnath Thakoor, CEO of the FSC, said that the project was developed “in full collaboration between the industry and the regulator.”

“The publication of a Guidance Note on Security Tokens Offering (STO) and Security Tokens Trading Systems is another stepping stone in building an open and transparent regulatory regime for Fintech in Mauritius. We already have a growing interest for these specific licences and are expecting to receive several applications in the upcoming months.” Thakoor commented on the release.

The spokesperson also revealed that further regulation regarding security token exchanges would be released sometime later this year.

However, it is important to note that there are a few requirements that businesses must abide by to maintain their licence. For one, licence holders will need to sign up to a strict anti-money laundering (AML) measures and countering the finance of terrorism (CFT) requirements. Similar to traditional exchanges, they will be obligated to publish trading data on a day to day basis and submit it for review to the FSC.

In addition, licensed security token trading systems will also have to keep a minimum of 35 million Mauritian rupees (around $880,000 USD) ready. They will need to have a registered custodian for their digital assets and for any fiat currency taken as part of the business.

The spokesperson explains that the purpose of the new licensing regime is to turn Mauritius, which has historically presented itself as a crypto-friendly jurisdiction, into a regional hub for security token trading in both Africa and nearby India.

As the country is not hindered by the same legacy systems that have pinned down similar technological innovation in the developed world, Mauritius hopes it can gain a competitive edge over other jurisdictions.