Mauritius FSC Releases Guidance Note on Security Token Offerings

Guidelines Released

Pundits from around the world have been pining for clarification on regulations pertaining to digital securities. In a recently released document, the Mauritius Financial Services Commission did just that.

In this communication, the FSC touched on various issues causing confusion. Here are a few brief highlights.

• All STOs are subject to be regulated by the Securities Act 2005
• Security Tokens cannot be offered without FSC approval, except in the following instances:
  • Offered to Sophisticate Investors, Expert Investors, Expert Funds, Professional Collective Investment Schemes, and Specialised Collective Investment Schemes

Alongside simple statements of clarification, came various warnings from the FSC. They were explicitly clear that ‘carrying out financial services without a licence is a criminal offence’.

Beyond this warning to potential STO hosts, the FSC issued warnings to investors, themselves. Closing out their document, the FSC stated the following:

“Given their high-risk nature, the FSC urges all prospective investors to fully ascertain the related risks prior to committing any funds for investment in Securities Tokens…In addition, the FSC hereby informs investors that any investment in Securities Tokens is ta their own risks and that they are not protected by any statutory compensation arrangement in Mauritius”

The ‘Guidance Note’ can be viewed in its entirety, HERE.

Mauritius Financial Services Commission (FSC)

The Mauritius Financial Services Commission is the nation’s variant of the United States Securities and Exchange Commission.

This regulatory body is responsible for ensuring fair business practices within the small nation. This is achieved through oversight of financial offerings from the perspective of both investors and issuers of financial instruments.

The document discussed here today marks the FSC’s second guidance note in the past six months. This note builds upon the first, in which they discuss the ‘Recognition of Digital Assets’.

While they are by no means anti-STO, the FSC has made it clear that they will not be held responsible for reckless investors who take part in poorly structured ‘investments’.

Mauritius

Mauritius is a small island nation situated in the Indian Ocean. President Barlen Vyapoory presides over a population totaling over 1.2 million.

In Other news

Another regulatory body of note that has recently released guidelines similar to those discussed here today, is the United States Securities and Exchange Commission (SEC). This recent release came after months of United States based companies requesting clarification on rules. Below are a couple of articles detailing these events.

SEC Experts – Framework for Investment Contract Analysis of Digital Assets

Templum Implores SEC to Provide Clarification on Security Token Services