The Pacific island nation of Nauru has passed a new law to establish its first national crypto regulator, aiming to oversee digital assets and exchanges.
Using money from the now-defunct cryptocurrency exchange, the brother of former FTX CEO Sam Bankman-Fried planned to purchase Nauru and construct a doomsday bunker.
To become a crypto hub, the small Pacific nation of Nauru has enacted laws creating a specialized virtual asset regulatory body that will oversee digital banking, Web3 innovation, and cryptocurrency.
About 12,500 people live in the country, a western Pacific Island sovereign state in Micronesia, northeast of Australia. Its approximate land size is 21 square kilometers. It is the world’s smallest island nation and the third-smallest country overall.
The government said in a statement on Tuesday that the bill creates the Command Ridge Virtual Asset Authority (CRVAA), which would manage a licensing program enabling cryptocurrency companies to register and provide their services using Nauru as a base.
Under the measure, cryptocurrency is not securities.
The law defines cryptocurrency as a commodity rather than a security; payment tokens are not considered part of investment contracts.
CRVAA authorization will now be required for various cryptocurrency operations, including running cryptocurrency exchanges, initial coin offerings, non-fungible tokens, lending, staking, yield farming, and other decentralized finance services.
Additionally, the CRVAA will regulate digital banks, cross-border payment systems, and stablecoin issuance.
Playing to be the leader in digital assets
According to Nauru President David Adeang, the legislation’s goal is to make the country a leader in digital assets in Oceania.
Before the law was passed, trading cryptocurrencies was permitted, but there was no particular control over their use or set of guidelines.
According to the UN Multidimensional Vulnerability Index, Nauru is ranked among the most vulnerable countries in the area for increased susceptibility to economic shocks, Adeang added.
“This ambitious move seeks to leverage the potential of virtual assets to strengthen economic resilience and diversify revenue streams,” he stated.
“Nauu hopes to promote sustainable growth and direct new financial inflows into strategic instruments like its Intergenerational Trust Fund by implementing robust oversight of VASPs,” Adeang continued.
At one point, Sam Bankman-Fried’s brother wanted to purchase Nauru.
Sam Bankman-Fried, the former CEO of FTX, had allegedly planned to purchase Nauru and construct a doomsday bunker there.
An unidentified FTX Foundation executive and Bankman-Fried’s younger brother, Gabriel, conspired to purchase the island with money from the now-defunct cryptocurrency exchange, according to a memo disclosed in a lawsuit filed in July 2023.