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Monaco Strengthens Cryptocurrency Anti-Money Laundering Regulations

The principality of Monaco has introduced new legislation aimed at strengthening its anti-money laundering (AML) regulations in the cryptocurrency sector.

New Legislation

Law 1.528, adopted on July 7, 2022, provides a more detailed and dynamic legal framework for digital investors.

Definitions and Conditions

  • Crypto Assets: Defined as financial tokens or digital assets, including virtual financial assets, usage tokens, and non-fungible tokens (NFTs).
  • Conditions for Services: The law introduces several conditions for the provision of services on digital assets.
  • Initial Coin Offerings (ICOs): Clarifies the legal regime for ICOs in Monaco.

Prior Approval Requirements

The legislation distinguishes between activities that require a prior approval from:

State Minister

+ Issuance of crypto assets
+ Deposit or administration of crypto assets
+ Operating of negotiation platforms for crypto assets
+ Transfer of digital assets

Commission de Contrôle des Activités Financières (CCAF)

+ Investments in crypto assets
+ Execution of orders on crypto assets
+ Reception-transmission of orders on crypto assets
+ Advice on crypto assets

Registration and Requirements

  • Registration: Operators must register in Monaco.
  • Good Reputation: Have good reputation among their managers.
  • AML/CTF Procedure: Implement an AML/CTF procedure.
  • Asset Freeze: Freeze assets corresponding to the criteria of the Monegasque Financial Circuits Information and Control Service.

ICOs in Monaco

An ICO is defined as an offering of tokens that consists of a proposal to subscribe such tokens by any means whatsoever. These fundraising transactions are subject to a prior administrative approval issued by the State Minister, whether they qualify as public or private.

  • Private ICOs: Private ICOs involving tokens are subject to at least one of the following criteria:
    • Offer targeting qualified investors only
    • Offer targeting less than 150 non-qualified investors
    • Offer targeting investors who purchase tokens for a total price of at least EUR 100,000
    • Offering of tokens with a nominal value of at least EUR 100,000 per token

Conclusion

The law provides that the offer of tokens cannot concern non-fungible tokens, and when the ICO targets the public, the offer of tokens cannot be done with financial tokens. The issuer must determine the nature of the token and its related rights, the nature of the issuance (either public or private), or the nominal value of a token.

Gordon S. Blair Law Offices

Gordon S. Blair Law Offices assists various actors involved in the crypto assets sector, including relocation or installation in Monaco. The firm also assists banking and financial entities in this regard.