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Maldives Moves to Regulate Digital Currency with New Guideline
The Maldives Monetary Authority (MMA) has released a guideline aimed at regulating the country’s central bank digital currency (CBDC), in an effort to explore its potential and mitigate risks. The Regulatory Sandbox for CBDC, as it is called, provides a controlled environment for experimentation with digital technologies.
Objective of the Guideline
According to the MMA, the primary objective of the guideline is to equip the authority and its regulated businesses and institutions with the knowledge and capacity needed to implement a CBDC in a controlled production environment.
Regulatory Framework
The regulatory framework builds on earlier studies and surveys conducted by the MMA, including:
- A national study on central bank digital currency
- Stakeholder survey on Maldives’ capability to implement CBDC
- Regulatory sandbox framework for CBDC and fintech
Risk Management and Conditions
The guideline focuses on risk management, acknowledging that a risk-free environment is impossible in innovation. Instead, it aims to create a controlled space that promotes CBDC while mitigating risks associated with innovative solutions.
Key requirements for entry into the Regulatory Sandbox include:
- Legal compliance
- Financial stability
- Innovation
- Technology expertise
- Commitment to regulatory obligations
The application process is outlined in detail, including evaluation criteria such as fitness and eligibility. The guideline also outlines conditions for issuing permits, extending or varying existing permits, or withdrawing from the Regulatory Sandbox.
Reporting Requirements
Reporting requirements are emphasized, with participants required to submit:
- Interim reports detailing statistical information, key outcomes, risk management measures, and lessons learned
- Final reports summarizing the experiment’s results and findings
The MMA’s role in monitoring and participants’ responsibilities are clearly defined.
Technical Guideline
The technical guideline serves as a framework ensuring experimentation with CBDC within the Regulatory Sandbox aligns with the MMA’s objectives, promotes innovation, and safeguards the interests of all stakeholders involved.