Is Crypto Legal in Micronesia?
Overview
Micronesia, specifically the Federated States of Micronesia (FSM), is a member of the Asia/Pacific Group on Money Laundering (APG) and is committed to implementing the Financial Action Task Force (FATF) Recommendations. While the FSM's regulatory framework for virtual assets is still evolving, its AML/CFT obligations extend to virtual asset service providers (VASPs) based on international standards and its existing general AML/CFT legislation.
Regulatory Bodies
Ongoing Development: The APG report indicates that the FSM Banking Commission was in the process of developing a VASP Code of Practice at the time of the report (July 2022), which would further detail practical guidance for compliance.
Operating Models
9/9 verdictsCan specific business models operate in Micronesia? Each card answers the operational question for one kind of operator. Curated cells reflect counsel-grade review; AI-generated cells should be confirmed before relying on them.
Conditional · medium burden.
AI · UnreviewedConditional · medium burden.
AI · UnreviewedConditional · no licensing.
AI · UnreviewedConditional · high burden.
AI · UnreviewedConditional · high burden.
AI · UnreviewedConditional · high burden.
AI · UnreviewedConditional · low burden.
AI · UnreviewedConditional · high burden.
AI · UnreviewedConditional · medium burden.
AI · UnreviewedPrimary Legislation
| Law / Regulation | Year | Scope |
|---|---|---|
| Likely Implicit Application of Common Law Principles | Likely Implicit Application of Common Law Principles: Due to historical ties and influence, the FSM's legal system often draws from U.S. common law principles. | |
| Application of General Securities Law (if applicable) | Application of General Securities Law (if applicable): If a token were classified as a security under existing FSM law, then the issuer would theoretically be subject to any existing general securities registration and disclosure… |
Licensing Requirements
No Explicit Test: The FSM does not have an explicit "Howey Test equivalent" for cryptocurrency tokens.
Likely Implicit Application of Common Law Principles: Due to historical ties and influence, the FSM's legal system often draws from U.S. common law principles. Therefore, if a court or regulator in the FSM were to assess whether a crypto token constitutes a security, it would most likely implicitly apply a functional test very similar to the U.S. Howey Test.
The Howey Test (U.S. Standard): An "investment contract" (and thus a security) exists if there is:
An investment of money (or other assets).
With an expectation of profits.
To be derived solely from the efforts of others.
This test is widely adopted or mirrored in various common law jurisdictions globally to determine what constitutes an "investment contract" or "security."
Investment/Security Tokens: Tokens that represent ownership in a company, a share of profits, fractional ownership of real assets, or provide rights akin to traditional securities (e.g., dividends, voting rights) would almost certainly be considered securities. This would include most tokens issued through Initial Coin Offerings (ICOs) where the primary purpose is capital raising from investors expecting a return from the issuer's efforts.
Utility Tokens: Tokens intended to provide access to a product or service within an ecosystem might not be considered securities if they have immediate utility and their primary value is derived from that use, rather than from speculative appreciation based on the efforts of others. However, many "utility tokens" have been found to be securities if they are marketed as investments, lack immediate functionality, or if their value is primarily speculative based on the development team's efforts.
Payment Tokens (e.g., Bitcoin, stablecoins): Tokens primarily designed and used as a medium of exchange or store of value, without a "common enterprise" or expectation of profits from the efforts of others (beyond general market forces), are generally less likely to be considered securities.
No Specific Crypto Requirements: There are no specific registration or exemption requirements published by the FSM for token issuers.
Application of General Securities Law (if applicable): If a token were classified as a security under existing FSM law, then the issuer would theoretically be subject to any existing general securities registration and disclosure requirements. Given the nascent nature of crypto regulation in the FSM, it is highly improbable that existing securities laws would be practically adaptable to digital asset offerings without explicit guidance or amendments. Issuers would likely find themselves in a regulatory vacuum or an unworkable compliance scenario.
No Specific Crypto Rules: Similar to issuance, there are no specific rules governing the secondary trading of cryptocurrency tokens in the FSM.
Application of General Securities Trading Law (if applicable): If a token were deemed a security, secondary trading would technically be subject to general rules for securities exchanges, broker-dealers, and market conduct. However, these rules are not designed for decentralized or global crypto trading platforms, making practical application extremely difficult without tailored legislation.
No Publicly Available Examples: There are no publicly available enforcement examples or legal cases specifically related to cryptocurrency securities violations in the Federated States of Micronesia. This lack of enforcement data underscores the absence of a clear regulatory framework in this area.
The classification of cryptocurrency tokens as securities.
Specific legal tests for determining if a crypto token is a security.
Registration, licensing, or exemption requirements for crypto token issuers or exchanges.
Secondary trading rules for crypto assets.
FSM National Government Website: This is the primary portal for government information.
FSM Department of Finance & Administration: This department oversees financial matters but has not published crypto-specific guidance.
FSM National Code: The compilation of FSM national laws. While it contains general financial and banking laws, it does not specifically address digital assets or their classification as securities.
AML/KYC Requirements
No verified facts yet. 38 unverified fact(s) in explorer
Travel Rule
Micronesia (Federated States of Micronesia, FSM) has no specific cryptocurrency or digital asset legislation, and no dedicated regulatory authority for virtual assets has been established as of 2025–2026 FSM Government – FSM Government
No licensing or registration regime exists for cryptocurrency businesses, and no entity has been licensed to conduct virtual asset activities in the jurisdiction FSM Government – FSM Government
The country's financial regulatory framework is limited to traditional banking oversight under the Department of Finance and Administration, which has issued no guidance on digital assets FSM Government – FSM Government
Micronesia's foreign affairs capacity includes banking, commercial, and economic relations conducted in its own name, but no virtual asset treaty or international agreement has been concluded The Compact of Free Association between the United States of America and the Federated States of Micronesia
The practical reality is that there is no operational pathway for crypto businesses to achieve regulatory compliance, and no travel-rule implementation exists for virtual asset transfers
The Federated States of Micronesia operates under its Constitution with a national government comprising Legislative, Executive, and Judicial branches, but no specific financial regulator for virtual assets has been designated FSM Government – FSM Government
The Department of Finance and Administration (DFA) serves as the national treasury and financial management body, headed by Secretary Honorable Sihna Lawrence, with contact at PS158, Palikir, Pohnpei State, FM 96941, Phone (691) 320-2640 FSM Government – FSM Government
The Department of Justice, headed by Secretary Honorable Joses Gallen at PS105, Palikir, Pohnpei State, FM 96941, Phone (691) 320-2644/2608, would handle criminal enforcement but has published no virtual asset regulations FSM Government – FSM Government
The FSM National Government has no central bank, and the national currency is the U.S. dollar, with the U.S. Federal Reserve providing monetary services under the Compact of Free Association The Compact of Free Association between the United States of America and the Federated States of Micronesia
The Compact of Free Association, as amended, was contained in Title II, Sec. 201 of the Compact Amendments Act of 2003 (US Public Law 108-188), and establishes that the FSM has capacity to conduct foreign affairs in its own name and right, including banking and commercial relations The Compact of Free Association between the United States of America and the Federated States of Micronesia
Under Section 121(b)(2) of the Compact, the FSM explicitly has capacity to conduct "commercial, diplomatic, consular, economic, trade, banking, postal, civil aviation, communications, and cultural relations," which would encompass any future digital asset arrangements The Compact of Free Association between the United States of America and the Federated States of Micronesia
Micronesia is not a member of the Financial Action Task Force (FATF), and no status assessment by FATF or Moneyval has been published on the official government website FSM Government – FSM Government
The FSM has no published anti-money laundering law specifically addressing virtual assets, and no Financial Intelligence Unit (FIU) is listed among national agencies FSM Government – FSM Government
A National Task Force on Tax Reform was convened by Vice President Palik, indicating ongoing fiscal policy work, but no outcome related to digital assets has been published Vice President Palik Convenes National Task Force on Tax Reform Meeting
The FSM government maintains a national public laws archive through the Congress (cfsm.gov.fm), which lists public laws but contains no virtual asset legislation in the available records 4th Public Laws
No licensing regime exists for cryptocurrency exchanges, custodians, wallets, or any virtual asset service providers in the Federated States of Micronesia FSM Government – FSM Government
No entity has been licensed to conduct virtual asset activities in the FSM, and there is no public registry of authorized crypto businesses FSM Government – FSM Government
The Department of Finance and Administration has not published any application process, capital requirements, or structural requirements for digital asset businesses FSM Government – FSM Government
Under the Compact of Free Association, the FSM's authority over banking and commercial relations is recognized, but no implementing regulations for virtual asset licensing have been enacted The Compact of Free Association between the United States of America and the Federated States of Micronesia
The FSM has four state governments (Chuuk, Kosrae, Pohnpei, and Yap), each with constitutional autonomy, but none has published state-level virtual asset licensing requirements FSM Government – FSM Government
No monetary thresholds, minimum capital, or surety bond requirements exist for crypto businesses because the regulatory framework itself does not exist FSM Government – FSM Government
The FSM National Government's official website lists no "license" or "registration" category for financial technology or digital asset enterprises among its services FSM Government – FSM Government
There is no expected timeline for implementing a licensing regime, as no public consultation or draft law has been announced by the FSM Congress or Executive branch FSM Government – FSM Government
The number of licensed entities in the virtual asset space is zero, and this should be prominently noted by any business evaluating market entry FSM Government – FSM Government
The FSM has not enacted any anti-money laundering (AML) or know-your-customer (KYC) requirements specifically applicable to cryptocurrency or digital asset businesses FSM Government – FSM Government
No customer due diligence (CDD), enhanced due diligence (EDD), or suspicious transaction reporting (STR) obligations exist for virtual asset service providers under FSM law FSM Government – FSM Government
The national government does not list a Financial Intelligence Unit (FIU) or equivalent body responsible for receiving suspicious transaction reports related to digital assets FSM Government – FSM Government
No record retention periods, beneficial ownership disclosure requirements, or PEP (politically exposed persons) screening obligations have been prescribed for crypto entities FSM Government – FSM Government
The Department of Justice has not published any AML guidance or enforcement framework for virtual assets, and its website is noted as being under maintenance FSM Government – FSM Government
The FSM Social Security Administration, the FSM Development Bank, and the National Fisheries Corporation are the only financial-adjacent public bodies listed, and none has jurisdiction over digital asset AML compliance FSM Government – FSM Government
The absence of a national AML framework for virtual assets means no travel-rule requirements (FATF Recommendation 16) have been transposed into FSM law FSM Government – FSM Government
There is no requirement to collect or transmit originator and beneficiary information for virtual asset transfers, as the FSM has not implemented FATF's travel rule FSM Government – FSM Government
No enforcement actions, penalties, fines, arrests, or cases involving cryptocurrency or digital asset businesses have been reported by the FSM Government FSM Government – FSM Government
The Department of Justice has not published any virtual asset-related enforcement actions, and no court rulings on digital assets from the FSM judiciary are available FSM Government – FSM Government
No administrative fines or sanctions have been imposed on any entity for unlicensed crypto activity, because no licensing regime exists to violate FSM Government – FSM Government
The FSM Government's news archive, covering events through August 2026, contains no reports of cryptocurrency-related prosecutions or regulatory actions FSM Government – FSM Government
The U.S. Customs and Border Protection FOIA notice is unrelated to FSM domestic enforcement and does not apply to Micronesian crypto regulation Freedom of Information Act (FOIA) | U.S. Customs and Border Protection
No tax guidance has been issued for virtual assets in the Federated States of Micronesia FSM Government – FSM Government
The FSM has a National Task Force on Tax Reform, convened by Vice President Palik, indicating the national tax system is under review, but no digital asset tax provisions have been announced Vice President Palik Convenes National Task Force on Tax Reform Meeting
The FSM Government does not publish a national income tax code or capital gains tax schedule on its official website, and no rates for crypto gains have been specified FSM Government – FSM Government
No value-added tax (VAT) or goods and services tax (GST) framework for digital asset transactions has been established FSM Government – FSM Government
The Department of Finance and Administration, which oversees fiscal matters, has issued no rulings on the tax treatment of cryptocurrency mining, trading, or staking income FSM Government – FSM Government
The FSM relies on the U.S. dollar as its currency under the Compact of Free Association, but U.S. tax laws do not automatically apply to FSM residents or businesses The Compact of Free Association between the United States of America and the Federated States of Micronesia
No tax treaties or bilateral agreements addressing digital asset taxation between the FSM and other countries have been published The Compact of Free Association between the United States of America and the Federated States of Micronesia
The FSM has no comprehensive AML/CFT framework for virtual assets, meaning businesses cannot achieve compliance with FATF standards, including the travel rule FSM Government – FSM Government
There is no designated regulator for cryptocurrency, leaving businesses without a competent authority for licensing, supervision, or guidance FSM Government – FSM Government
The absence of a Financial Intelligence Unit means no reporting channel exists for suspicious transactions involving virtual assets FSM Government – FSM Government
Businesses operating in the FSM face legal uncertainty because no law defines whether virtual assets are securities, commodities, currency, or property FSM Government – FSM Government
The four state governments (Chuuk, Kosrae, Pohnpei, Yap) may assert separate regulatory authority, creating potential jurisdictional fragmentation and compliance confusion FSM Government – FSM Government
The FSM's foreign affairs capacity under the Compact of Free Association allows it to enter into international agreements on banking and commerce, but no virtual asset treaties have been pursued The Compact of Free Association between the United States of America and the Federated States of Micronesia
The U.S. government's role under the Compact is limited to consultation on foreign affairs and does not extend to regulating FSM domestic virtual asset activities The Compact of Free Association between the United States of America and the Federated States of Micronesia
The U.S. Customs and Border Protection FOIA process change, effective January 22, 2026, is irrelevant to FSM crypto regulation and does not provide any compliance pathway for Micronesian virtual asset businesses Freedom of Information Act (FOIA) | U.S. Customs and Border Protection
The practical risk is that any virtual asset business in the FSM operates entirely outside any legal framework, facing potential civil liability, criminal exposure, and inability to access banking services FSM Government – FSM Government
No public consultation, draft legislation, or regulatory roadmap for digital assets has been announced, meaning the regulatory vacuum is likely to persist through 2026 and beyond FSM Government – FSM Government
The tax reform task force may eventually address virtual assets, but until it publishes recommendations, businesses have no certainty on tax treatment Vice President Palik Convenes National Task Force on Tax Reform Meeting
Businesses seeking to comply with international standards such as FATF Recommendation 16 (travel rule) have no domestic legal mechanism to do so, creating reputational and correspondent banking risks FSM Government – FSM Government
The FSM's official government services list includes no category for financial technology or virtual asset businesses, indicating the government has not prioritized this sector FSM Government – FSM Government
FSM Government – FSM Government
The Compact of Free Association between the United States of America and the Federated States of Micronesia
Vice President Palik Convenes National Task Force on Tax Reform Meeting
Freedom of Information Act (FOIA) | U.S. Customs and Border Protection
Tax Reporting
Tax reporting data collection in progress.
Custody Requirements
Custody regulation data collection in progress.
Stablecoin Regulation
No specific classification: Stablecoins are not explicitly classified as e-money, payment tokens, or securities under any specific FSM legislation.
E-money/Payment Tokens: If a stablecoin were to function purely as a digital representation of fiat currency for payment purposes, it might, in theory, be viewed through the lens of general payment services or e-money regulations, if such specific regulations existed outside of traditional banking. However, FSM's framework primarily focuses on licensed deposit-taking institutions.
Securities: If a stablecoin were structured to represent an investment, a share in profits, or carried specific rights that qualify it as an investment contract, it could potentially fall under broader securities principles, although FSM's securities laws are less developed compared to major economies.
Commodity/Property: In the absence of specific financial instrument definitions, stablecoins could potentially be treated as digital property or commodities, subject to general contract and property law.
No specific reserve requirements: Given the absence of specific stablecoin regulation, there are no statutory reserve requirements for stablecoin issuers in the FSM.
General principles: If an entity were to issue a stablecoin that in any way resembled a deposit-taking activity, it would likely fall under the FSM Banking Act and be subject to the reserve requirements for licensed financial institutions. However, this would entail meeting the full requirements of a traditional bank.
No specific stablecoin issuer license: There is no distinct licensing regime for stablecoin issuers in the FSM.
Existing financial institution licensing: Any entity wishing to operate in a manner that resembles banking, money transmission, or other regulated financial services (e.g., taking deposits, transmitting funds on behalf of others) would be subject to the existing licensing requirements under the FSM Banking Act (Title 30 of the FSM National Code). Obtaining a banking license is a complex and capital-intensive process designed for traditional financial institutions.
The FSM National Code, Title 30, Chapter 1 has been largely repealed (except for Section 122) by PL 8-47; the current regulatory framework for banks and financial institutions is administered by the FSM Banking Board under its statutes and regulations, not comprehensively contained in Title 30.
Reference (via PacLII): https://www.paclii.org/fm/legis/fsm_act/fsmc1980362/ (This links to the FSM Code via the Pacific Islands Legal Information Institute, which is a common resource for FSM laws. You would navigate to Title 30).
While not specific to stablecoins, any activity that falls within the scope of "banking business" or "financial institution" as defined in this Act would require a license from the FSM Banking Board.
No specific statutory redemption rights: Since there are no specific stablecoin laws, there are no explicit statutory provisions governing redemption rights for stablecoin holders in the FSM.
Contractual basis: Redemption rights would primarily be governed by the terms and conditions agreed upon between the stablecoin issuer and the holder (i.e., the stablecoin's whitepaper, user agreement, or other contractual documents). Enforcement would rely on general contract law.
None: As there are no specific rules for stablecoins in general, there are absolutely no specific regulations or prohibitions concerning algorithmic stablecoins in the FSM.
No current interaction: The Federated States of Micronesia has not publicly announced any plans, research, or initiatives regarding a Central Bank Digital Currency (CBDC). Given its economic size and resources, it is highly unlikely to be pursuing a CBDC in the near future. Therefore, there is no existing or anticipated regulatory framework for how stablecoins would interact with a Micronesian CBDC.
Securities Classification
Securities classification data collection in progress.
Sanctions & Restrictions
Sanctions data collection in progress.
Enforcement Actions
No verified facts yet. 13 unverified fact(s) in explorer
Research & Articles
Regulatory Forecast
high confidenceLikely enforcement action expected around 2026-07-14
Based on 81 historical regulatory events for Micronesia, averaging every 2 days, with increasing regulatory activity.
Recent Updates
None identified for cryptocurrencies. General financial oversight may fall under bodies like the FSM Banking Board, b...
None identified for cryptocurrencies. General financial oversight may fall under bodies like the FSM Banking Board, but no crypto-specific authority is mentioned in available sources.
Undecided/no regulation: Cryptocurrencies lack legal recognition or a regulatory framework, allowing use without ...
Undecided/no regulation: Cryptocurrencies lack legal recognition or a regulatory framework, allowing use without prohibition but absent specific rules on licensing, AML/CFT, taxation, or consumer protection for crypto activities.
No bans or endorsements exist, unlike neighbors (e.g., Palau supports use; Marshall Islands recognizes DAOs).
No bans or endorsements exist, unlike neighbors (e.g., Palau supports use; Marshall Islands recognizes DAOs).
None identified for crypto: No central bank, financial authority, or agency oversees virtual assets, as confirmed...
None identified for crypto: No central bank, financial authority, or agency oversees virtual assets, as confirmed by multiple trackers noting the absence of regulation.
FSM Banking Act 1980 (Title 29 of the FSM Code): This act provides the general legal framework for banking and fi...
FSM Banking Act 1980 (Title 29 of the FSM Code): This act provides the general legal framework for banking and financial services. While it does not specifically regulate VASPs, any VASP that offers services resembling traditional financial services (e.g., custody of fiat currency, remittances) might fall under the purview or interpretation of this act or require specific licensing.
Federated States of Micronesia (FSM) Financial Intelligence Unit (FIU): This is the primary authority responsible...
Federated States of Micronesia (FSM) Financial Intelligence Unit (FIU): This is the primary authority responsible for anti-money laundering and combating the financing of terrorism (AML/CFT) in the FSM. While they address financial crimes, specific crypto enforcement requires a clear regulatory basis for virtual assets.
Investment/Security Tokens: Tokens that represent ownership in a company, a share of profits, fractional ownershi...
Investment/Security Tokens: Tokens that represent ownership in a company, a share of profits, fractional ownership of real assets, or provide rights akin to traditional securities (e.g., dividends, voting rights) would almost certainly be considered securities. This would include most tokens issued through Initial Coin Offerings (ICOs) where the primary purpose is capital raising from investors expecting a return from the issuer's efforts.
No Specific Crypto Requirements: There are no specific registration or exemption requirements published by the FS...
No Specific Crypto Requirements: There are no specific registration or exemption requirements published by the FSM for token issuers.
Application of General Securities Law (if applicable): If a token were classified as a security under existing FS...
Application of General Securities Law (if applicable): If a token were classified as a security under existing FSM law, then the issuer would theoretically be subject to any existing general securities registration and disclosure requirements. Given the nascent nature of crypto regulation in the FSM, it is highly improbable that existing securities laws would be practically adaptable to digital asset offerings without explicit guidance or amendments. Issuers would likely find themselves in a regulatory vacuum or an unworkable compliance scenario.
No Publicly Available Examples: There are no publicly available enforcement examples or legal cases specifically ...
No Publicly Available Examples: There are no publicly available enforcement examples or legal cases specifically related to cryptocurrency securities violations in the Federated States of Micronesia. This lack of enforcement data underscores the absence of a clear regulatory framework in this area.
FSM Department of Finance & Administration: This department oversees financial matters but has not published cryp...
FSM Department of Finance & Administration: This department oversees financial matters but has not published crypto-specific guidance.
FSM National Code: The compilation of FSM national laws. While it contains general financial and banking laws, it...
FSM National Code: The compilation of FSM national laws. While it contains general financial and banking laws, it does not specifically address digital assets or their classification as securities.
General principles: If an entity were to issue a stablecoin that in any way resembled a deposit-taking activity, ...
General principles: If an entity were to issue a stablecoin that in any way resembled a deposit-taking activity, it would likely fall under the FSM Banking Act and be subject to the reserve requirements for licensed financial institutions. However, this would entail meeting the full requirements of a traditional bank.
No specific stablecoin issuer license: There is no distinct licensing regime for stablecoin issuers in the FSM.
No specific stablecoin issuer license: There is no distinct licensing regime for stablecoin issuers in the FSM.
Existing financial institution licensing: Any entity wishing to operate in a manner that resembles banking, money...
Existing financial institution licensing: Any entity wishing to operate in a manner that resembles banking, money transmission, or other regulated financial services (e.g., taking deposits, transmitting funds on behalf of others) would be subject to the existing licensing requirements under the FSM Banking Act (Title 30 of the FSM National Code). Obtaining a banking license is a complex and capital-intensive process designed for traditional financial institutions.
Contractual basis: Redemption rights would primarily be governed by the terms and conditions agreed upon between ...
Contractual basis: Redemption rights would primarily be governed by the terms and conditions agreed upon between the stablecoin issuer and the holder (i.e., the stablecoin's whitepaper, user agreement, or other contractual documents). Enforcement would rely on general contract law.
No current interaction: The Federated States of Micronesia has not publicly announced any plans, research, or ini...
No current interaction: The Federated States of Micronesia has not publicly announced any plans, research, or initiatives regarding a Central Bank Digital Currency (CBDC). Given its economic size and resources, it is highly unlikely to be pursuing a CBDC in the near future. Therefore, there is no existing or anticipated regulatory framework for how stablecoins would interact with a Micronesian CBDC.
Undefined/Indirect: The FSM currently lacks a comprehensive and explicit regulatory framework specifically for cr...
Undefined/Indirect: The FSM currently lacks a comprehensive and explicit regulatory framework specifically for cryptocurrencies and virtual assets. The approach can be characterized as largely undefined or operating in a "grey area."
No Explicit Ban: There is no public record of a ban on cryptocurrencies or virtual assets in the FSM.
No Explicit Ban: There is no public record of a ban on cryptocurrencies or virtual assets in the FSM.
Individual Trading: There is no explicit ban on individuals trading cryptocurrencies within the FSM. Citizens are...
Individual Trading: There is no explicit ban on individuals trading cryptocurrencies within the FSM. Citizens are generally free to buy, sell, and hold cryptocurrencies using international platforms.
Legal Basis: The FSM enacted the Anti-Money Laundering and Counter-Terrorist Financing Act 2011 (as amended 202...
Legal Basis: The FSM enacted the Anti-Money Laundering and Counter-Terrorist Financing Act 2011 (as amended 2020). The 2020 amendments were specifically introduced to address FATF Recommendations on VAs and VASPs, including the Travel Rule obligations. This amendment requires VASPs to register, be licensed, and comply with AML/CFT obligations.
Ongoing Development: The APG report indicates that the FSM Banking Commission was in the process of developing a ...
Ongoing Development: The APG report indicates that the FSM Banking Commission was in the process of developing a VASP Code of Practice at the time of the report (July 2022), which would further detail practical guidance for compliance.
License Revocation/Suspension: VASPs failing to comply may have their registration or license suspended or revoke...
License Revocation/Suspension: VASPs failing to comply may have their registration or license suspended or revoked, effectively preventing them from operating.
Supervisory Actions: The FSM Banking Commission can impose various administrative sanctions and remedial actions.
Supervisory Actions: The FSM Banking Commission can impose various administrative sanctions and remedial actions.
Source: General knowledge of AML/CFT legislation and implied from the APG report's assessment of FSM's overall AM...
Source: General knowledge of AML/CFT legislation and implied from the APG report's assessment of FSM's overall AML/CFT framework effectiveness and sanctions regime (though not specifically itemized for Travel Rule in the provided excerpt). Accessing the full FSM AML/CFT Act 2011 (as amended 2020) would provide precise details. Finding an online, publicly accessible version of the consolidated FSM AML/CFT Act with 2020 amendments can be challenging for smaller jurisdictions.
The FSM enacted the Anti-Money Laundering and Counter-Terrorist Financing Act 2011 (as amended 2020), which serve...
The FSM enacted the Anti-Money Laundering and Counter-Terrorist Financing Act 2011 (as amended 2020), which serves as the primary legal framework for AML/CFT compliance. The 2020 amendments specifically addressed FATF Recommendations on Virtual Assets (VAs) and Virtual Asset Service Providers (VASPs), including Travel Rule obligations, requiring VASPs to register, be licensed, and comply with AML/CFT obligations APG Enhanced Follow-Up Report
The FSM Banking Act 1980 (Title 29 of the FSM Code) provides the general legal framework for banking and financia...
The FSM Banking Act 1980 (Title 29 of the FSM Code) provides the general legal framework for banking and financial services. While it does not specifically regulate VASPs, any VASP that offers services resembling traditional financial services (e.g., custody of fiat currency, remittances) might fall under the purview or interpretation of this act or require specific licensing FSM FIU Official Site
Identification and Verification for Natural Persons: VASPs must obtain and verify identity using reliable, indepe...
Identification and Verification for Natural Persons: VASPs must obtain and verify identity using reliable, independent source documents, data, or information such as government-issued ID, passport, or driver's license FSM FIU Official Site
Finding an online, publicly accessible version of the consolidated FSM AML/CFT Act with 2020 amendments can be challe...
Finding an online, publicly accessible version of the consolidated FSM AML/CFT Act with 2020 amendments can be challenging for smaller jurisdictions. The APG report serves as the most reliable publicly available source for understanding FSM's regulatory stance on VASPs and Travel Rule obligations APG Enhanced Follow-Up Report
The interaction between the Anti-Money Laundering and Counter-Terrorist Financing Act 2011 (as amended 2020) and the ...
The interaction between the Anti-Money Laundering and Counter-Terrorist Financing Act 2011 (as amended 2020) and the Banking Act 1980 creates a layered regulatory approach: VASPs offering services resembling traditional banking may require dual compliance, while the AML/CFT Act provides the specific virtual asset framework FSM FIU Official Site
The Federated States of Micronesia (FSM) operates under a financial regulatory system primarily governed by Title 3...
The Federated States of Micronesia (FSM) operates under a financial regulatory system primarily governed by Title 30 of the FSM National Code, which addresses banking and financial institutions. The FSM Banking Act (codified in Title 30) was most recently updated in 2014, as reflected in the version available through the Pacific Islands Legal Information Institute FSM National Code Title 30 via PacLII. This 2014 update predates the widespread emergence of stablecoins and digital assets, meaning the law contains no specific provisions for these innovations.
The FSM Banking Board, established under Section 303 of Title 30, serves as the primary financial regulator, but has ...
The FSM Banking Board, established under Section 303 of Title 30, serves as the primary financial regulator, but has issued no public guidance, press releases, or rulemakings related to stablecoins as of April 2026 FSM Banking Board Official Website.
World Bank Pacific Financial Regulation Report 2023
World Bank Pacific Financial Regulation Report 2023
FSM Banking Board Official Website
FSM Banking Board Official Website
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