The tiny Pacific nation of Nauru has passed legislation to establish a dedicated virtual asset regulatory authority covering crypto, digital banking and Web3 innovation, aiming to become a crypto hub.
Nauru is a western Pacific Island sovereign state in Micronesia, northeast of Australia, with an estimated area of 21 square kilometers and a population of roughly 12,500 people. It’s the third-smallest country in the world and the world’s smallest island nation.
The bill legislates the Command Ridge Virtual Asset Authority (CRVAA), which will be tasked with overseeing a licensing scheme for crypto firms to register and offer their services using Nauru as a base, Nauru’s government said in a statement on Tuesday.
Crypto not securities under bill
Under the legislation, crypto is defined as a commodity, not a security, and payment tokens are excluded from investment contract status.
A range of crypto activities, such as operating crypto exchanges, initial coin offerings, non-fungible tokens, lending, staking, yield farming, and other decentralized finance services, will now all be subject to CRVAA authorization.
The CRVAA will also oversee stablecoin issuance, cross-border payment solutions, and digital banks.
Making a play to be a digital asset leader
Nauru President David Adeang said the hope is that regulation will pave the way for the nation to become a digital asset leader in the Oceania region.
Prior to the legislation, crypto trading was legal in Nauru, but there wasn’t any specific oversight, rules or regulations to govern how it was used.
At the same time, Adeang said Nauru is considered one of the region’s most at-risk nations, under the United Nations Multidimensional Vulnerability Index, for a heightened exposure to economic shocks.
“This bold step aims to harness the potential of virtual assets to diversify revenue streams and fortify economic resilience,” he said.
Related: Vanuatu passes long-awaited crypto laws that won’t be ‘light touch’
“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,” Adeang added.
Sam Bankman-Fried’s brother wanted to buy Nauru once
The brother of former FTX CEO Sam Bankman-Fried once had plans to buy Nauru and build a doomsday bunker.
The scheme was revealed in a memo during a July 2023 lawsuit detailing Bankman-Fried’s younger brother, Gabriel, and an unnamed FTX Foundation executive’s plot to buy the island using funds from the now-defunct crypto exchange.
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