At a time when most African countries continue to adopt a conservative approach towards cryptocurrencies, the island nation, Mauritius is silently providing the regulatory safeguard that the emerging industry needs.
On Monday, the Mauritius Financial Services Commission (FSC) released a guidance note on security token offerings (STOs) noting in the first lines that they remain highly supportive of fintech related initiatives.
Under the new rules, the FSC outlined that securities tokens will fall into the same category as other traditional securities governed by the country’s Securities Act 2005. The only difference between the old and new securities is that the latter is in digital format.
Projects hoping to conduct an STO thus would have to get approval from the FSC in the form of a license or risk being judged as criminal offenders.
However, in a case where the project is offering the security tokens to sophisticated and expert investors as well as professional investment funds, then they can conduct the sales without notifying the FSC.
Projects who want to qualify for and maintain an FSC license to issue an STO in Mauritius would have to:
Conduct due diligence regarding the managing team, the viability of the project and the underlying assets used to back the issued tokens.
Disclose any potential risks to investors in a clear and transparent manner before selling the tokens
Abide by other rules defined in the Securities Act 2005.
For investors, the regulators provided a reminder that investing in STOs present a considerable risk, and thus interested individuals must ascertain the risk levels before putting in their money. Additionally, the regulators stressed that there is no compensation arrangement to be provided if an investor loses money to an STO project.
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