Mauritius has always been at the forefront of promoting crypto-backed assets in Africa, but this has not been extended to ‘Non-Fungible Token’ (NFT) platforms. In a latest statement by the country’s Financial Services Commission (FSC), the integrated regulator for the non-bank financial services sector of Mauritius, non-fungible tokens are currently not regulated.
“It has been recently reported in the local press article that a foreign entity has partnered with other domestic companies to operate a ‘Non-Fungible Token’ Platform in Mauritius. A non-fungible token typically refers to a unique virtual token which is created for use on distributed ledgers (such as blockchain), and cannot be divided or interchanged with any other type of virtual token.
The public is hereby informed that non-fungible tokens are currently not regulated by the Financial Services Commission (the “FSC”). The FSC will communicate further should there be any new regulatory frameworks to inter alia address the offer of nonfungible tokens in Mauritius,” the commission stated.
What Are Non-fungible Tokens And How Do They Work?
Essentially, this is the most recent craze in the cryptocurrency world, and it has exploded in recent months. If something is fungible, it can be exchanged for another good or asset; if something is non-fungible, it cannot. Plane tickets are examples of non-fungible assets in the real world. Although two plane tickets may appear identical, they will each have a different destination, seat number, and airline class, preventing them from being swapped like for like.
Read also:Nigerian Startup Launches Crypto Investment Robo-Advisor
Christie’s held the first auction of a piece of art that does not exist in physical form in March.
It was created by digital artist Beeple and sold for $69.3 million (£50.3 million). Earlier this week, Sotheby’s sold a collection of NFTs by digital artist Pak for a total of $16.8 million (£12.2 million), including an image of a single pixel for $1.36 million (£987,000).
“From the creative industry perspective, we believe this is a great opportunity for artists and IPR owners to monetise their existing assets via a new revenue stream. The myth of the starving artist needs to be rewritten. Every creator, artist, influencer has the right to showcase their IP with dignity and on a credible platform with legitimate buyers,” Vishakha Singh, Adviser, NFT Marketplace said.
Security Token Trading Systems Are Eligible To Be Issued Licenses In Mauritius
Under Section 7.1 of Mauritius recent regulation, any person wishing to establish, maintain or operate a system for the trading of Security Tokens in Mauritius shall apply for a Trading Securities System licence. The implication of this is that all trading in security tokens in Mauritius would require a license, going forward.
Read also:Revolutionalising Legal Practice With Technology
However, such token trading companies must at all times, be required to have and maintain a minimum unimpaired capital of 35 million rupees or an equivalent amount ($880,000).That is, the trading system must all times have $880,000 in its accounts to be considered credit worthy. Under the new regulation, the capital must be held in real currency (fiat) as against cryptocurrencies in a licensed Mauritian bank.
Read also:A Proposed Anti-Cash Tax Law In Cameroon Aims At Increased Digital Payments
The token trading system must also at all times be managed and controlled from Mauritius. The implication of this is that the new trading system would not be available to investors wishing to register their securities token trading companies in Mauritius, while having their central administration and management abroad. Therefore, such companies would be regarded as resident in Mauritius for purposes of taxation; and it should be noted that in Mauritius, they are subject to corporate tax at 15%. Tax advantages for such companies also include that there is no capital gains tax and also no withholding tax on dividends, interest, and royalties paid or estate duties on their earnings.
Mauritius NFT Africa Mauritius NFT Africa
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer