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Cryptocurrency Fraud Prevention in Anguilla: A New Era of Regulation
Anguilla, a British overseas territory in the Caribbean, has taken a significant step towards regulating cryptocurrency transactions. The Anguillan government enacted the Anguilla Utility Token Offering Act (AUTO Act) 2018, establishing the Distributed Ledger Advisory Committee and prohibiting any person from undertaking an initial utility token offering or a secondary utility token offering in or from within Anguilla unless registered as an issuer.
Regulatory Framework
The AUTO Act aims to provide a safe and effective regulatory framework for non-security token offerings, which are believed to represent a majority of the current capital raising activity within the blockchain community. The government has noted that some types of tokens are considered securities, and thus are already regulated under existing securities laws.
Registration Requirements
To become registered, entities must draft a “white paper” along with their disclosure documents, which undergo a technical and legal review. This review includes:
- Information about the company’s structure
- Location
- Business status
- Description of the project
- Technical and legal description of the tokens to be offered
- How any proceeds will be used
- Anti-money laundering provisions
Registration Fee and Levy
The Anguillan government provides for a registration fee and a 1.5 percent levy on the total amount raised by a token offering.
Benefits of the AUTO Act
The AUTO Act effectively regulates utility tokens, avoiding the burdens of securities regulations and higher levels of regulatory scrutiny. Utility tokens are categorized as those that may be redeemed for consumer goods or services, rather than a share in profits or an interest in technology connected to the offering.
Significance of Anguilla’s Efforts
This development is significant in the world of cryptocurrency, where many jurisdictions have yet to enact laws governing cryptocurrencies. Anguilla’s efforts demonstrate its commitment to providing clearly defined rules and increased safety for the blockchain community.
By establishing a clear regulatory framework, Anguilla aims to become the leader in establishing best practices for cryptocurrency offerings, protecting both the people of Anguilla and the participating public.