The Financial Services Commission of Mauritius has issued new guidance notes setting out how it will regulate stablecoins, formally opening the island’s financial system to virtual assets tied to real world value. Published on 13 August, the notes apply to any institution that issues or trades these tokens within the jurisdiction.
Regulators say closer oversight is needed because stablecoins have moved far beyond their original role as a safer entry point into crypto trading. Their growing use alongside decentralized finance now carries real implications for the wider financial system.
The FSC’s approach centers on the function a stablecoin actually performs rather than the form it takes, applying what it calls a same risks, same rules principle. Under the Virtual Asset and Initial Token Offerings Services Act of 2021, stablecoins are classified as virtual assets eligible for trading, payment and investment, and anyone dealing in them must hold a license from the Bank of Mauritius.
Issuers will need to hold reserves and liquid assets covering their liabilities, meet anti money laundering and counter terrorism financing standards, and maintain strong data security. Responsibility for protecting token holders sits with company boards and senior managers, who must also publish key details on asset valuation, redemption terms and ownership rules. Algorithmic and yield bearing stablecoins are explicitly barred from the market.
Janesh Chuttoo, a corporate and commercial transactions barrister at Orison Legal in Mauritius, called the guidance “a welcome and important development” for the jurisdiction’s positioning in digital assets.
Global alignment and a warning to investors
The commission says the framework reflects industry feedback, coordination with other regulators and alignment with international standards set by bodies including the Financial Stability Board, the International Organization of Securities Commissions and the Basel Committee on Banking Supervision. That cross border alignment matters given how often stablecoin arrangements span multiple jurisdictions at once.
Alongside the new rules came a caution. The FSC acknowledged stablecoins can improve efficiency and drive financial innovation, but warned they also introduce fresh risks for investors and the financial system more broadly.
It urged investors to act prudently and deal only with regulated entities, noting that stablecoins are not immune to price swings and should not be treated as inherently safe.
The guidance arrives as Mauritius works to strengthen its broader financial governance credentials. The Financial Crimes Commission issued its own rules last year targeting corruption, fraud, money laundering and drug financing, and a recent study ranked Mauritius among the top ten African nations for anti corruption standards.
Meanwhile, questions remain about how the new regime will function in practice. Chuttoo pointed to unresolved issues around the legal enforceability of redemption claims, how reserve assets and holder rights would be treated in an insolvency, and how cross border arrangements will work when issuers, custodians and users sit in different countries.
He described these as areas needing greater clarity rather than gaps in the current framework, as Mauritius shifts from setting the rules of the market to supporting more advanced stablecoin businesses within it.