Source: Republic of Nauru
In a landmark move for the Pacific region, the Nauru Parliament on Tuesday June 17 passed legislation to establish a dedicated virtual asset regulatory authority.
The Bill establishes the Command Ridge Virtual Asset Authority (CRVAA), named after the highest point of land in Nauru, as an autonomous regulator overseeing virtual assets, digital banking, and Web3 innovation.
It will provide a licencing scheme that will allow virtual asset service providers (VASPs) to register and offer their services using Nauru as a base.
Nauru President David Adeang said the regulation would pave the way for Nauru to be a digital asset leader in the region and is another step towards strengthening financial integrity, investing in future generations, and forging new pathways for resilience.
He pointed out that Nauru is one of the Pacific’s most at-risk nations, acknowledged under the United Nations Multidimensional Vulnerability Index (MVI), for its heightened exposure to economic and environmental shocks, and that the Government needed to embrace innovation.
“This bold step aims to harness the potential of virtual assets to diversify revenue streams and fortify economic resilience,” he said.
“By implementing robust oversight of VASPs, Nauru aims to foster sustainable growth, channel new financial inflows into strategic instruments such as its Intergenerational Trust Fund, and reduce its reliance on climate financing, which is often challenging to secure.”
The President said Nauru aspires to secure a more sustainable and self-reliant economic future.
“We want to be a government of solutions and innovation, be proactive not passive, and positively approach the future with boldness,” he said.
Minister for Commerce and Foreign Investment Maverick Eoe told Parliament that more countries are recognising the potential of virtual assets from blockchain technologies to decentralised finance.
“This Bill proposes to introduce a framework that will put Nauru on par with other countries leading in the development of their digital economies and generating revenue from such developments,” he said.
“The licensing framework….ensures Nauru becomes a competitor, attracting businesses that bring investment, job creation, and financial innovation,” he said.
“By regulating VASPs, token issuance, and secure digital transactions, we can position Nauru as a hub for these types of innovation and development within this part of the world.
He said the legislation is a commitment to the future prosperity of the country and a statement that Nauru does not fear the digital transformation, but embraces it and leads within the Pacific region.
CRVAA will be tasked with ensuring cybersecurity standards, monitoring financial transactions and enforcing compliance with international anti-money laundering and financial transparency protocols.
The Bill, which provides unmatched legal certainty for the token-issuer, introduces a groundbreaking token classification system that provides long-awaited clarity for the global crypto industry, stating that:
- Cryptocurrencies are presumed commodities, not securities;
- Utility and payment tokens are excluded from investment contract status;
- Governance and reward tokens are protected from misclassification
The Nauru law defines the activities subject to CRA authorisation as follows:
- Operation of centralised or decentralised virtual asset platforms
- Exchange services between virtual assets and/or fiat currencies
- Custodial and non-custodial virtual asset wallet services
- Issuance of virtual tokens, including ICOs, STOs, and NFTs
- Lending, staking, yield farming, and decentralised finance (DeFi) services
- Stablecoin issuance and cross-border payment solutions
- Operation of digital banks and digital payment platforms
- Issuance and management of E-money.
