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Mauritius publishes regulatory guidance on security token proposals

The Mauritius Financial Services Commission (FSC) clarified the rules applicable to projects launching security token offers (STO).

The FSC Guidelines published Monday said that security tokens are classified as securities, as defined in the 2005 Securities Law of the country, but in digital form.

In accordance with the instructions, issuers raising funds through must receive prior approval of FSC. However, if the problem is aimed at “experienced” investors and funds or professional investment schemes, prior approval is not required.

In addition, any person who forces others to make transactions with security tokens must also be licensed in accordance with the Securities Act and “strictly” comply with the relevant rules. If this is not done, it will be considered a criminal offense, the document says.

These rules include due diligence on the STO project, its team, and “rights and obligations” in relation to assets that support tokens. STO projects must also disclose information, informing customers of “accurate, timely, and transparent” about potential risks.

In an additional note, FSC also warned that STOs bear “high risk” and that investors are not protected by any statutory compensation agreements in the island country of the Indian Ocean.

The STO Guide is the second in a series of notes for FINTECH firms. In September last year, an observer published his first guide to digital assets, recognizing them as an asset class for “sophisticated and experienced” investors.

Earlier this year, FSC also issued final rules for custodians of digital assets, according to which, among other requirements, they must obtain a license to provide custody services.

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