Financial Crime World

Vanuatu’s Reserve Bank Warns Against Cryptocurrency Use Amid Regulatory Concerns

The Reserve Bank of Vanuatu (RBV) has issued a public notice, reiterating its stance on the use of cryptocurrencies in the country. The bank strongly advises all corporate, financial institutions, public enterprises, and individual customers to refrain from involving themselves in cryptocurrency business with immediate effect.

Previous Warnings

In October 2017, the RBV issued a press release warning against the use of Bitcoin as a form of payment in Vanuatu, citing concerns over its lack of central repository or single administrator. The bank has since been monitoring recent activities involving cryptocurrencies and is now reiterating its previous warnings.

Concerns Over Cryptocurrency Use

The RBV highlights several concerns associated with cryptocurrency use:

  • Unpredictable Price Fluctuations: Cryptocurrency prices can fluctuate unpredictably, making it a high-risk asset for residents and investors.
  • Irreversible Transactions: Transactions using cryptocurrencies are also irreversible, which poses risks to businesses and individuals alike.
  • Lack of Regulation: The lack of intermediaries in cryptocurrency transactions makes it difficult for authorities to monitor and regulate anti-money laundering (AML) and counter-terrorism financing (CTF) compliance.

The RBV emphasizes that Vanuatu’s Vatu currency remains the only legal tender recognized by international markets, and cryptocurrencies are not a recognized medium of exchange in the country. The bank is concerned about the reputational risks posed by cryptocurrencies to Vanuatu’s image as a whole.

Advice to Stakeholders

In light of these concerns, the RBV advises all stakeholders to refrain from engaging in cryptocurrency business, citing sections 14-15 of the RBV Act that establish the Vatu currency as the sole legal tender. The bank is committed to promoting a central depository for securities and transactions, which will be monitored daily by a central bank once the national payment system legislation comes into effect.

Conclusion

The public notice serves as a reminder to all corporate, financial institutions, public enterprises, and individual customers that cryptocurrencies are not compatible with normal central banking currency business and are therefore considered illegal in Vanuatu.