Monaco Tightens Grip on Cryptoassets in Bid to Combat Financial Crime
Strengthening Regulatory Framework to Combat Financial Crime
In an effort to combat financial crime and strengthen its regulatory framework, Monaco has introduced a new law that imposes stricter conditions on the provision of services related to cryptoassets. The law, which came into effect on July 7, 2022, requires companies operating in the Principality to obtain prior approval from the State Minister or the Commission de Contrôle des Activités Financières (CCAF) before offering services such as issuance, deposit, and administration of cryptoassets.
Key Requirements for Prior Approval
To ensure transparency and accountability, certain activities related to cryptoassets require prior approval from the State Minister. These include:
- Issuance of cryptoassets
- Operating a negotiation platform displaying sale and purchase interests in cryptoassets
- Transferring digital assets with other digital assets or with a legal tender
Conditions for Prior Approval
The State Minister will only grant approval subject to certain conditions, including:
- Registration of the service provider in Monaco
- Good reputation of the service provider’s managers
- Implementation of an anti-money laundering (AML) and combating the financing of terrorism (CTF) procedure
CCAF Requirements for Prior Approval
The CCAF will require prior approval for activities such as investments in cryptoassets, execution of orders on cryptoassets, reception-transmission of orders on cryptoassets, and advice on cryptoassets. However, financial providers that are already authorized by the CCAF to perform these class of financial activities in Monaco will be exempt from obtaining a prior approval, subject to providing prior information to the regulator.
Initial Coin Offerings (ICOs)
The law also clarifies the legal regime applicable to ICOs in the Principality. An ICO is defined as an offering of tokens consisting 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.
Exemptions for Private ICOs
Private ICOs involving tokens will be exempt from obtaining a prior approval if they meet certain criteria, including:
- Offering 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
Strengthening Regulatory Framework to Combat Financial Crime
The new law is seen as a significant step by Monaco to strengthen its regulatory framework and combat financial crime in the cryptoassets sector. The law aims to ensure that companies operating in the Principality are transparent and accountable in their activities related to cryptoassets, and that they comply with AML/CTF regulations.
Expertise in Cryptoassets Sector
Gordon S. Blair Law Offices (Monaco), a leading law firm specializing in corporate and commercial law, has expertise in assisting clients involved in the cryptoassets sector, including relocation or installation of companies in the Principality. The firm also assists banking and financial entities in this regard, providing guidance on compliance with regulatory requirements and ensuring that their activities are in line with AML/CTF regulations.
As Monaco continues to develop its regulatory framework for cryptoassets, it is clear that the principality is committed to ensuring a safe and transparent environment for companies operating in the sector.