Fintech overview in Mauritius

Introduction?

Mauritius has worked hard to establish itself as an international financial centre since the 1990s, traditionally focusing on companies with double tax avoidance treaty access, collective investment schemes, private equity funds, and asset protection vehicles. With high demand for blockchain technology in recent years, Mauritius adopted a new regulatory framework for virtual assets to revolutionise how financial services are delivered and accessed in or out of the country.

Regulatory framework?

The Mauritius Financial Services Commission (FSC) introduced a legislative framework, known as the Virtual Asset and Initial Token Offerings Services Act 2021 (VAITOS), to support the growth of Fintech. Recognising the potential of fintech investment in the country, the government empowered the regulator to formally enact this legislative framework, which was previously being issued through sandbox regulatory licenses.

Digital payment solutions?

Mobile banking is becoming a standard mode of payment on the island, and the Bank of Mauritius has recently issued consultations for a digital currency (the Digital Rupee).

Lending and microfinance

Crowdfunding, previously enabled through a sandbox regulatory license, was formalised with the new VAITOS regulations issued in 2021 and has played a significant role in expanding access to credit for Mauritius' population. New rules for peer-to-peer lending have also evolved since the process was first introduced in 2020.

Online lending platforms have also emerged, providing quick and straightforward loans to small business owners and individuals. Through alternative credit scoring methods and digital verification processes, companies have been able to reach previously underserved segments of the population, promoting financial inclusion and economic growth.

Blockchain and cryptocurrency

The adoption of blockchain technology and cryptocurrencies is gaining traction in Mauritius. The government has expressed interest in leveraging blockchain for land registry and identity verification, which are seen as enhancing transparency, reducing fraud, and improving governance.

Cryptocurrencies are regulated in Mauritius, and any unlicensed activity involving these digital assets is prohibited. In March 2023, the FSC regulators finalised their latest version of Guidance Notes on Security Token Offerings and Security Token Trading systems following the enactment of the VAITOS act. Included was a Guidance Note on stable coins in July 2023 following the enactment of the VAITOS Act. This was meant to reinforce Mauritius' position as a digital economy.???

Challenges

While Mauritius has instituted a legal framework for virtual assets, there are still concerns over the management and administration of such virtual assets and aligning service providers with international norms in relation to anti-money laundering rules and investor protection.??