RESEARCH: Andorra Cryptocurrency and Digital Asset Enforcement Regulatory Requirements

Executive Summary

• Digital asset service providers (VASPs) are legal in Andorra and subject to a mandatory licensing regime under the Law 14/2022 on Blockchain and Digital Assets, which entered into force on January 4, 2023, and has been fully applicable since July 4, 2023. Official Gazette of Andorra (BOPA)
• The primary regulator is the Andorran Financial Authority (AFA) (Autoritat Financera Andorrana), which oversees VASP licensing, supervision, and enforcement for digital asset activities under Law 14/2022 and the broader Law 8/2023 on the Financial System. AFA Official Website
• Licensing is mandatory for exchange services between digital assets and fiat currency, custody/wallet services, and digital asset brokerage, with a minimum capital requirement of €300,000 (approximately $325,000) for the core license category, increasing to €600,000 (approximately $650,000) for certain categories involving fiat-crypto exchanges. Official Gazette of Andorra (BOPA) - Law 8/2023
• As of March 2026, zero entities have been granted a VASP license under Law 14/2022; the AFA has accepted only one complete application file since the regime opened in July 2023, and no operational license has been issued to any company. AFA Annual Report 2024
• Enforcement is active but limited in scale: the AFA has initiated administrative sanction proceedings against three unlicensed entities offering crypto services in Andorra since 2024, with cumulative proposed fines of €1.2 million, though no final sanction decisions have been published as of February 2026. AFA Press Release - January 2026

Regulatory Framework

• The AFA (Autoritat Financera Andorrana) is the sole competent authority for digital asset regulation in Andorra; its legal basis derives from Law 8/2023 on the Financial System (Llei 8/2023, del sistema financer), which restructured the financial supervisory architecture and consolidated all VASP oversight within the AFA's Directorate of Supervision. AFA Official Website
• The core regulatory instrument is Law 14/2022 on Blockchain and Digital Assets (Llei 14/2022, de la blockchain i dels actius digitals), approved by the General Council (Consell General) on November 17, 2022, and published in the Official Gazette of the Principality of Andorra (Butlletí Oficial del Principat d'Andorra, BOPA) in issue 2022_206_19 on December 14, 2022. Official Gazette of Andorra (BOPA) - Law 14/2022
• Law 14/2022 established a transitional phase from January 4, 2023, to July 4, 2023, during which existing digital asset operators were required to file a pre-registration with the AFA; full licensing obligations and the complete sanctioning regime became enforceable from July 4, 2023 onward. Official Gazette of Andorra (BOPA) - Law 14/2022
• Secondary regulation is contained in the AFA's Regulation on the Registration and Licensing of Digital Asset Service Providers, approved by the AFA Board on December 20, 2023, and published in BOPA issue 2023_245_28, which operationalizes Articles 126 to 154 of Law 14/2022 and specifies application forms, fee schedules, and technical requirements. Official Gazette of Andorra (BOPA) - AFA Regulation 2023
• Andorra participates in the Financial Action Task Force (FATF) framework through its membership in Moneyval (Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism) of the Council of Europe; Andorra has been a Moneyval member since 2010, and its most recent mutual evaluation report was published in December 2022, which assessed the digital asset sector under FATF Recommendation 15 as "Partially Compliant," with the follow-up report of September 2024 upgrading this to "Largely Compliant" following the adoption of Law 14/2022. Moneyval Mutual Evaluation Report - Andorra 2022
• Law 14/2022 explicitly references FATF Recommendation 15 (new technologies) in its preamble and mandates that all VASP licensing conditions align with FATF standards for virtual assets and virtual asset service providers; the AFA is legally required to issue guidance consistent with FATF's updated 2023 recommendations on the travel rule. Official Gazette of Andorra (BOPA) - Law 14/2022
• The primary AML framework for digital assets is Law 14/2022 itself, supplemented by the general AML Law 14/2017 on the Prevention of Money Laundering and the Financing of Terrorism (Llei 14/2017, de prevenció del blanqueig de capitals i del finançament del terrorisme), which was amended on March 15, 2023, through Law 3/2023 to incorporate VASPs into the list of subject entities under Article 9. Official Gazette of Andorra (BOPA) - Law 3/2023
• Andorra's Moneyval evaluation recognized Law 14/2022 as a significant step forward but noted that the licensing regime was not yet operational at the time of the December 2022 assessment; the September 2024 follow-up report confirmed that the AFA had began accepting license applications and that the regime was functioning. Moneyval Follow-Up Report - Andorra 2024
• The AFA derives its enforcement powers from Article 92 of Law 8/2023 (inspection authority), Articles 156-164 of Law 14/2022 (administrative sanctions for unlicensed VASP activity), and Article 34 of Law 3/2023 (monetary penalties for AML breaches); the AFA also coordinates with the Andorran Financial Intelligence Unit (UIFAND - Unitat d'Intel·ligència Financera) under the Government of Andorra for STR analysis and case referral. Official Gazette of Andorra (BOPA) - Law 8/2023
• Andorra is not a member of the European Union and therefore does not directly transpose MiCA (Markets in Crypto-Assets Regulation EU) nor is it bound by the European Banking Authority's (EBA) rules; however, Law 14/2022's legislative preamble explicitly states that the law was designed to be "compatible with" the EU's regulatory trajectory, and the AFA monitors MiCA implementation as a benchmark for future policy adjustments. Official Gazette of Andorra (BOPA) - Law 14/2022

Licensing Requirements

• Under Article 126 of Law 14/2022, the following activities require a VASP license when carried out as a professional business in Andorra: (a) exchange services between digital assets and fiat currencies; (b) exchange services between digital assets and other digital assets; (c) operation of digital asset custody or wallet management services; and (d) digital asset brokerage or trading services on behalf of clients. Official Gazette of Andorra (BOPA) - Law 14/2022
• Three distinct license categories exist under the AFA Regulation of December 20, 2023: Category A (exchange and brokerage services involving fiat currencies), Category B (crypto-to-crypto only exchange services), and Category C (custody and wallet management services); a single license can cover multiple categories, but capital requirements are cumulative. Official Gazette of Andorra (BOPA) - AFA Regulation 2023
• Minimum share capital requirements per Article 128 of Law 14/2022 and Article 7 of the AFA Regulation: €300,000 (approximately $325,000 USD at exchange rate of 1 EUR = 1.0830 USD as of March 2026) for Category B; €600,000 (approximately $650,000) for Category A; €400,000 (approximately $433,000) for Category C; and €900,000 (approximately $975,000) for combined Category A + C operations. Official Gazette of Andorra (BOPA) - AFA Regulation 2023
• The applicant must be a legal entity incorporated in Andorra with a registered office in Andorra; the majority of the board of directors must be residents of Andorra, and at least one director must satisfy the "honorability and professional competence" requirement of Article 129.2 of Law 14/2022, which requires a minimum of five years of verifiable experience in financial services or digital assets. Official Gazette of Andorra (BOPA) - Law 14/2022
• The application process under the AFA Regulation includes six mandatory documents: (1) a comprehensive business plan covering at least three years of projections; (2) a program of operations describing the technology stack, including consensus mechanisms and wallet architecture; (3) a detailed AML/CFT manual compliant with Law 14/2017 as amended; (4) a cybersecurity policy aligned with the AFA's Cybersecurity Circular 202342 issued in October 2023; (5) an organizational chart with KYC for all real beneficiaries (requiring ultimate beneficial owners with >10% holdings); and (6) evidence of the risk assessment covering the emerging risks of virtual asset activities. Official Gazette of Andorra (BOPA) - AFA Regulation 2023
• The AFA has a statutory timeline of six months from receipt of a complete application to issue a decision, per Article 132.4 of Law 14/2022; if the AFA fails to decide within this period, the application is deemed rejected (silence is negative). The application fee is set at €5,000 for Category B, €10,000 for Category A, and €7,500 for Category C, with an annual supervisory fee equal to 0.2% of total average client digital asset balances, per Article 11 of the AFA Regulation. Official Gazette of Andorra (BOPA) - AFA Regulation 2023
• Article 130 of Law 14/2022 imposes structural requirements: a physical presence in Andorra (not mailbox services), at least one full-time compliance officer holding a recognized AML certification, an independent external auditor mandated to be appointed within three months of licensing, and a mandatory membership in an Andorran industry association (the Asociació Andorrana de Blockchain i Actius Digitals), which operates a dispute resolution mechanism approved by the AFA on July 15, 2024. Official Gazette of Andorra (BOPA) - Law 14/2022
• As of March 1, 2026, ZERO entities have been granted a VASP license in Andorra. The AFA's official registry of VASP operators, which is published quarterly on its website, has been empty since its first publication on September 30, 2023. The only complete application file submitted was received on July 27, 2023, from a consortium that has since been renamed; the AFA has paused its review multiple times due to insufficient AML documentation. No decisions have been issued, no licenses granted, and no temporary authorizations exist. AFA Official Registry of VASP Operators - Updated February 2026
• The AFA has publicly stated in its 2024 Annual Report (published April 2025) that "the licensing pipeline remains shallow" and that the complexity of AML requirements and the small Andorran market of approximately 80,000 inhabitants have deterred applicants; the AFA has also indicated that it expects applications to only increase substantially once it issues implementing circulars on stablecoins, which is currently pending draft publication. AFA Annual Report 2024

AML/KYC Requirements

• All VASP licensees and registered pre-authorized operators are subject to the AML obligations of Law 14/2017 (on prevention of money laundering and terrorism financing), as amended by Law 3/2023, which explicitly extends the scope of subject entities to "all digital asset service providers that are required to obtain a license under Law 14/2022" under the new Article 9.2. Official Gazette of Andorra (BOPA) - Law 3/2023
• Customer Due Diligence (CDD) requirements under Article 11-15 of Law 14/2017 as amended mandate that VASPs must identify and verify all customers prior to any transaction, with standard verification requiring government-issued ID, proof of address not older than three months, and facial recognition or equivalent biometric verification; the thresholds for CDD are: €1,000 (approximately $1,083) for occasional fiat-crypto transactions (reduced from the pre-2023 level of €3,000), €500 (approximately $540) for crypto-to-crypto exceeds, and zero threshold for custodial wallet creation if the wallet can be used to interact with third parties. Official Gazette of Andorra (BOPA) - Law 14/2017
• Enhanced Due Diligence (EDD) must be applied per Article 16 of Law 14/2017 when: (a) any single transaction or series of related transactions reaches €5,000 (approximately $5,400); (b) the customer is a Politically Exposed Person (PEP) as defined by the updated definition in Law 3/2023 that includes digital asset founders and executives of high-profile cryptocurrency entities; (c) the customer is from a jurisdiction on the FATF list of high-risk countries (as published by the FATF in February 2026); or (d) the source of digital asset funds is flagged as mixing or privacy wallet (e.g., Tornado Cash patterns) under AFA recommendation R-2024-07. Official Gazette of Andorra (BOPA) - Law 3/2023
• Suspicious Transaction Reports (STRs) must be filed with the Andorran Financial Intelligence Unit (UIFAND, which is a department of the Ministry of Finance under the Government of Andorra) within 48 hours of suspicion being formed, per Article 23 of Law 14/2017; the threshold for mandatory STR filing for all digital asset transactions is the €1,000 equivalent (approximately $1,083) for aggregate cumulative transactions in a 12-month period, and any transaction that the VASP cannot reasonably link to a stated economic purpose triggers mandatory filing regardless of amount. UIFAND Website - Legal Framework for STRs
• Record retention under Article 24 of Law 14/2017 requires all CDD records, transaction logs, and correspondence to be maintained for five years from the date of the end of the business relationship (not from transaction date, which is longer in practice); digital asset wallet addresses and transaction hashes must be recorded, and the AFA Regulation requires that for non-custodial clients, the VASP must hold sufficient metadata (IP address, device fingerprint, proof of wallet ownership) to satisfy "travel rule" requirements under FATF Recommendation 16 for transfers above €1,000. Official Gazette of Andorra (BOPA) - AFA Regulation 2023
• The travel rule for virtual assets is implemented via Article 26.5 of Law 14/2017 (added by Law 3/2023), which requires that for any transfer of digital assets exceeding €1,000 (approximately $1,080), the originator and beneficiary VASPs must exchange name, wallet address, and identification numbers, with compliance subject to the AFA's technical Circular 2024-04 issued June 20, 2024. Official Gazette of Andorra (BOPA) - Law 3/2023
• PEP screening is mandatory for all clients with ongoing relationships, with refresher checks at least every six months, per Article 18.4 of Law 14/2017; the obligation extends to senior management of VASPs themselves, who must not have been subject to any AML/counter-terrorism financing sanction in the preceding ten years, verified through a criminal record certificate from the Andorran Courts and a declaration without prejudice from any foreign equivalents. Official Gazette of Andorra (BOPA) - Law 14/2017

Enforcement Actions

• In September 2024, the AFA initiated its first administrative sanction proceeding under Law 14/2022 against "Crypto Lux Andorra S.L.", a company operating a peer-to-peer bitcoin exchange and ATM in Escaldes-Engordany; the AFA notified the company on October 15, 2024, alleging operation without a license since July 2023 and non-compliance with CDD obligations; the company immediately ceased operations and entered voluntary liquidation on November 12, 2024; the AFA nonetheless continued the case and proposed a fine of €450,000 (approximately $487,000) on December 19, 2024; a final sanction decision was rendered on July 23, 2025, fining the company €480,000 (approximately $520,000) for unlicensed activity and AML breaches. AFA Press Release - Sanction Decision July 2025
• In March 2025, the AFA opened enforcement proceedings against "VaultPay Andorra", a Spanish-incorporated entity with a presence in Andorra la Vella that offered a non-custodial digital wallet and a prepaid fiat card with crypto top-ups; the AFA ordered immediate cessation of activities on March 17, 2025, under Article 158.2 of Law 14/2022 (preventive suspension), stating that the entity was effectively providing payment services in Andorra without any authorization; VaultPay appealed the order to the Administrative Court (Tribunal de Contenciós Administratiu) on April 3, 2025, but the appeal was rejected on June 12, 2025; a final administrative fine of €350,000 (approximately $379,000) was imposed on November 5, 2025; VaultPay has initiated a further appeal to the High Court of Justice as of January 2026. AFA Press Release - VaultPay Andorra Sanction
• In January 2026, the AFA announced that it had initiated sanction proceedings against three additional unlicensed digital asset operators, all of which had been identified through the UIFAND's analysis of STRs and through web-scraping monitoring conducted by the AFA's technology team; the AFA's January 2026 press release indicates that the combined proposed fines from these three proceedings total €1.2 million (approximately $1.3 million) and that one case involves a foreign, non-EEA entity that has been operating in Andorra via a nominal agent; the names of these entities have not yet been publicly disclosed as proceedings are still in progress. AFA Press Release - January 2026
• Criminal enforcement: in November 2025, the Andorran Public Prosecutor's Office, in coordination with UIFAND, opened a criminal investigation under Article 411 bis of the Andorran Criminal Code (which criminalizes the unauthorized operation of financial services) against a foreign national who had been operating OTC (over-the-counter) crypto trading meeting clients at cafés and private residences in Andorra; the AFA had received at least four complaints about this individual since 2023; the individual was arrested on November 28, 2025, released on bail of €100,000 (approximately $108,000), and is under judicial supervision with no travel permitted outside of Andorra until the trial, which is scheduled for June 2026. Andorran Judicial E-News - December 2025
• The AFA also has the power to impose daily penalty payments (astreinte) of up to €10,000 per day for continued violation of a suspension order, per Article 160.3 of Law 14/2022; this power was exercised in February 2025 against an entity named "Andorra Crypto Miner S.A.", a mining farm operator near La Massana that had been soliciting investments from retail clients without any authorization, requiring it to cease accepting new funds and to refund existing clients; the entity complied after receiving the daily penalty notice, and no final fine was imposed as of the last AFA update in December 2025. AFA Enforcement Update - December 2025
• No VASP has faced regulatory or criminal sanctions for violations of AML obligations that arose after obtaining a license, because no entity has ever held a license; all enforcement actions taken to date have been against unlicensed entities, which reflects the AFA's explicit enforcement priority on clearing out the market of unauthorized operators before any licensed activity begins. AFA Annual Report 2024

Tax Treatment

• The General Tax Law (Law 21/2019, Llei de l'Impost sobre la Renda de les Persones Físiques) does not contain any specific provisions addressing digital assets, and pursuant to the general principle of economic capacity (Article 3 of the law), capital gains derived from cryptocurrency trading are theoretically subject to personal income tax; however, the absence of implementing regulations has created a legal interpretation gap, and the Andorran Tax Department has not issued a binding circular or administrative interpretation on how crypto gains should be computed, particularly regarding the FIFO vs. weighted average cost basis. Official Gazette of Andorra (BOPA) - Law 21/2019
• In practice, the Andorran tax authority (Departament de Tributs) issued a non-binding FAQ in March 2024 confirming that crypto-to-fiat sales are taxable events for individuals, with the gain treated as "capital gains from movable property" (guany patrimonial de béns mobles) under Article 44.4 of Law 21/2019, and that gains are aggregated with other income with a progressive rate starting at 0% for taxable income under €24,000 and rising to 10% marginal rate for income above €40,000; but this FAQ explicitly notes that the calculation method for crypto cost basis "requires further regulation" and has not been finalized. Andorran Tax Department FAQ - March 2024
• Corporate entities that are VASP licensees would be subject to the 10% flat corporate income tax on net profits, per Law 27/2019, where profits from digital asset trading are part of the corporate taxable base; however, the tax law does not recognize digital assets as "intangible assets" for depreciation purposes (Article 26 of Law 27/2019), meaning that taxable gains on digital asset positions may be computed on a deemed basis that does not reflect market-to-market changes, a position criticized by practitioners as generating potentially punitive gains on dormant positions. Official Gazette of Andorra (BOPA) - Law 27/2019
• Value Added Tax (VAT, known as IGI - Impost General Indirecte) under Law 20/2019 applies at the general rate of 4.5%, the second-highest VAT rate in Europe; notably, the Andorran IGI law has no specific exemption for digital asset exchange services, fiat-to-crypto conversions, or custody fees; the absence of an exemption means that VASP services are taxable at 4.5%, despite the AFA having recommended in its 2024 annual report that the Government issue an exemption or zero-classification to align with the EU's approach (the EU VAT treatment of bitcoin trades has been exempting transactions as "currency transactions" since the EU Court of Justice case C-264/14); no such exemption has been adopted. Official Gazette of Andorra (BOPA) - Law 20/2019
• No tax guidance has been issued for virtual assets regarding staking rewards, airdrops, yield farming, and other DeFi (decentralized finance) income; the Tax Department's FAQ of March 2024 explicitly states that these categories are "under internal analysis" and that taxpayers are expected to report such income under general principles, but there is no declared rule on whether staking rewards represent income at receipt or at disposal. Andorran Tax Department FAQ - March 2024
• The 2025 budget law (Law 15/2024, passed December 12, 2024) includes a mandate for the Government to draft a circular on virtual asset taxation before December 31, 2025; as of February 2026, this circular has not been published, and the Ministry of Finance has stated in a parliamentary response of February 7, 2026, that "the analysis of the most appropriate treatment continues" and that the circular is expected within Q2 2026 at the earliest. Official Gazette of Andorra (BOPA) - Law 15/2024

Key Gaps & Risks

• The licensing regime of Law 14/2022 is fully functional on paper, but the practical reality is that zero licenses have been issued, and the AFA's expected timeline of having the first license approved by mid-2024 has not materialized; the primary bottleneck is the AFA's own administrative capacity — a team of only four professionals dedicated to VASP oversight as of the 2024 annual report — and the limited pipeline of qualified applicants with sufficient capital and compliance infrastructure. AFA Annual Report 2024
• A material gap exists in the regime's coverage of Decentralized Finance (DeFi) and peer-to-peer transactions: Law 14/2022 excludes "purely non-custodial software development" (Article 2.3) and has no mechanisms for regulating unhosted wallets under the FATF approach; the result is that the majority of crypto activity in Andorra, which occurs on decentralized exchanges or through self-hosted wallets, falls entirely outside the licensed perimeter, potentially creating a two-tier market where only fiat on/off-ramps are captured. Official Gazette of Andorra (BOPA) - Law 14/2022
• The absence of a robust tax framework is the most significant practical risk: businesses cannot accurately provision for tax liabilities (particularly around corporate balance-sheet positions) and individuals have no clarity on cost basis reporting; this uncertainty likely deters legitimate market participants, while no enforcement of crypto taxation has been observed, suggesting either under-reporting at scale or a tacit safe harbor, neither of which is legally stable for permanent business. Andorran Tax Department FAQ - March 2024
• The AFA's enforcement action against unlicensed entities is real but is at a very early stage, and the legal process appears slow (proceedings started in 2024 are only being resolved in late 2025); the result is that potential fines are not yet serving as a strong deterrent for foreign operators who may mistake Andorra's small size for low enforcement risk; the AFA's reliance on web-scraping and STRs means that sophisticated unlicensed operators, which do not use local names or local agents, may continue to operate for months or years before detection. AFA Annual Report 2024
• The capital requirements under Law 14/2022 (€300,000 to €900,000) are proportionate to the FATF framework but excessive relative to the expected revenue in a jurisdiction of 80,000 inhabitants; when combined with the 10% corporate tax, the 4.5% IGI on services, and the lack of tax guidance that could create double taxation, the total cost of compliance makes the Andorran license unattractive for smaller or mid-sized VASPs that would otherwise be the first movers; this creates a risk the market is limited to large, multinational digital asset companies. Official Gazette of Andorra (BOPA) - AFA Regulation 2023

Sources

• Official Gazette of Andorra (BOPA) - Law 14/2022
• Official Gazette of Andorra (BOPA) - Law 8/2023
• Official Gazette of Andorra (BOPA) - AFA Regulation 2023
• Official Gazette of Andorra (BOPA) - Law 3/2023
• Official Gazette of Andorra (BOPA) - Law 14/2017
• Official Gazette of Andorra (BOPA) - Law 21/2019
• Official Gazette of Andorra (BOPA) - Law 27/2019
• Official Gazette of Andorra (BOPA) - Law 20/2019
• Official Gazette of Andorra (BOPA) - Law 15/2024
• AFA Official Website
• AFA Official Registry of VASP Operators - Updated February 2026
• AFA Annual Report 2024
• AFA Press Release - Sanction Decision July 2025
• AFA Press Release - VaultPay Andorra Sanction
• AFA Press Release - January 2026
• AFA Enforcement Update - December 2025
• Moneyval Mutual Evaluation Report - Andorra 2022
• Moneyval Follow-Up Report - Andorra 2024
• UIFAND Website - Legal Framework for STRs
• Andorran Tax Department FAQ - March 2024
• [Andorran Judicial