The Seychelles Financial Services Authority (FSA), in coordination with the country’s Ministry of Finance, is reportedly working on a policy framework that would either prohibit or license cryptocurrency trading platforms that operate as registered international businesses. The move comes as the island nation faces a rising number of international investigations into scam crypto platforms traced back to its jurisdiction.
Global Scrutiny Forces Regulatory Action
According to a report by Bitcoin.com News, the Onecoin Bitcoin scam became the latest foreign crypto entity to be investigated following a formal request submitted to Seychelles law enforcement. Randolf Samson, who heads the FSA’s anti-money laundering and terrorist financing section, explained the rationale: “There are many incorporated companies that are facilitating that activity. The reason why they are using Seychelles is because we do not have a framework that would otherwise discourage them. Cryptocurrency developed quite fast but the laws of many countries are not up to date with this type of activity.”
Samson emphasized that a comprehensive risk assessment must be carried out to weigh the pros and cons before any final policy decision. If the assessment shows that licensing crypto trading platforms would benefit Seychelles — for instance, by attracting investment, creating jobs, or fostering innovation — then such companies will be licensed. Conversely, “if it brings too much risk and bad reputation, we will simply prohibit the activity.”
Balancing Reputation and Economic Opportunity
Despite the potential benefits, Samson acknowledged that a blanket ban could prove unpopular. “The problem with cryptocurrency, the way things are going, you will have to take a stance as it is popular among a growing number of people and other countries are taking options to regulate this activity.” If the licensing route is adopted, Seychelles would need to ensure that all licensed platforms comply with anti-money laundering and counter-terrorism financing obligations. This would also bring the island nation in line with the recent Financial Action Task Force (FATF) amendments made in June 2020, which require virtual asset service providers to be regulated.
The FSA has not yet set a deadline for the risk assessment or the final policy. However, officials indicated they are studying regulatory frameworks from jurisdictions such as Singapore, the United Kingdom, and the United States. Given Seychelles’ status as a small island economy heavily dependent on financial services, the outcome of this policy will be closely watched by crypto firms and regulators worldwide. A well-calibrated licensing regime could position Seychelles as a legitimate hub for crypto innovation, while a prohibition could drive companies to more permissive jurisdictions.