Andorra Takes a Significant Step Towards Economic Diversification with the Approval of Anti-Money Laundering Laws for Digital Assets
A Major Move towards Economic Diversification and Digital Transformation
The General Council of Andorra has approved the regulatory framework for blockchain and digital currencies through the “Digital Assets Act”. This act, which was admitted to parliamentary procedure on January 27, 2021, after 17 months of deliberation and 38 amendments, aims to regulate various issues related to digital assets, including public and private issuance, representation, and categories.
Anti-Money Laundering Provisions
The Digital Assets Act includes specific anti-money laundering provisions, authorizing entities and participants in the blockchain ecosystem to operate under strict supervision and control. Regulated entities must have a minimum capital requirement of paid-up cash to carry out their activities and maintain professional and directors’ liability insurance.
Licensing System and Registration Procedure
The act provides for:
- A licensing system
- A registration procedure
- Revocation of licenses
- Exercise of the activity by regulated entities
It also establishes a legal regime for the issuance of digital asset representation and participants in digital asset trading platforms, custodians, and other activities such as collective investment schemes.
Supervision and Enforcement
Andorra’s financial authorities, including the Andorran Financial Authority (AFA) and Police Department, will be responsible for supervising activities related to digital assets. The act provides for sanctions and infringements arising from non-compliance with regulations.
Unique Approach
The Digital Assets Act does not consider blockchain technology, tokens, and cryptocurrencies as financial instruments. Instead, it allows for their use in closed ecosystems through tokenization. However, the government has committed to drawing up a draft law regulating digital assets as financial instruments within 12 months of the act’s entry into force.
A Significant Step Forward
The approval of the Digital Assets Act marks a significant step towards positioning Andorra at the forefront of international efforts to attract foreign investment, talent, and new business models. The country is set to benefit from economic diversification through the adoption of blockchain technology and digital currencies.