In addition to cryptocurrencies not being accepted as currency, the bank says, investing in them is “very risky and speculative in nature”
Recently, the RBV became aware that a few financial institutions are directly involved in some form of cryptocurrency business, and some are even marketing a Vanuatu-owned cryptocurrency.
Given these recent activities, the RBV as the regulatory authority and issuer of Vatu currency as the sole legal tender in the country warns that “Cryptocurrency is a new product that operates without a central repository or single administrator or regulator like central banks and regulatory authorities.
Cryptocurrency is a digital asset designed to work as a medium of exchange using cryptography to secure the transactions and to control the creation of additional units of the currency.
“Any cryptocurrency and its derivatives use decentralized control as opposed to centralized electronic money/centralized banking systems. Because cryptocurrency trades operate outside of the banking system, it creates a risk for central banks to regulate it”.
Sections 14-15 of the RBV Act provides, among other things, that “the currency unit of Vanuatu shall be the Vatu, and its value in terms of other currencies shall be determined by the Reserve Bank of Vanuatu.
The Act further sets out that “should there be any currencies in which RBV is obliged to deal with must be approved by the Minister in consultation with the RBV”.
The Bank as a responsible monetary authority has the discretion to choosing what trading currencies to be included in the reserve of its external assets.
Bitcoins in their present forms are not compatible with normal central banking currency business, and are therefore considered illegal in Vanuatu under the RBV Act.
RBV is strongly advising all corporate, financial institutions, public enterprises, and individual customers and public at large to refrain from involving themselves in cryptocurrency business with immediate effect.
Following the crackdowns against the scheme in numerous countries, including Germany, India and most recently China, the Onecoin scam has reached the shores of the Pacific nation.
Photo supplied. Caption: Reserve Bank of Vanuatu in Port Vila