Since its independence in 1968, the former French and British colony of Mauritius has become one of the most successful economies in the region by focusing its resources on making the country a regional technology and financial services hub. Now, Mauritius is looking at blockchain as the vehicle by which to:
(a) solidify its competitive jurisdictional advantage; and
(b) drive continued innovation on the island.
Currently the Mauritius Financial Services Sector is seeking to brand itself as a regional haven for blockchain innovation and in doing so has the full support of the key government department (ie the Board of Investment Mauritius or “BOIM”) who can see that such technologies have the potential to take the Mauritian Economy to another level.
Publicly the BIOM have stated “Blockchain is an area where we will be focussing, building competencies, and ensuring that it permeates other sectors of the economy and government. Blockchain is one of these technologies we want to drive. We see a window of opportunity here to be able to leapfrog others”.
This a far cry from many, if not most, Financial Services Based Economies who are looking to limit the ability of locally registered International Business Companies and etc to undertake Crypto related activities.
Given Mauritius has a well-established financial services sector, a vibrant banking Industry and highly developed IT/communications technology industries, positioning itself as the preferred regional choice for investors in blockchain and financial technology makes good sense from a nation building perspective.
The Mauritius Regulatory Sandbox License
In a bid to become the Indian Ocean blockchain hub, Mauritius is reaching out to Cryptocurrency Developers and Entrepreneurs (in particular new ICOs) to take advantage of the country’s new Regulatory Sandbox License (RSL).
The sandbox allows businesses operating in areas including financial, medical and communications technology to begin operations notwithstanding the absence of a formal legislative or licensing framework.
It’s a clever move by the Mauritian Government because, prior to the Regulatory Sandbox License Project, the Mauritian Financial Services Authority had been unable to approve or incorporate innovative projects due to gaps in the regulatory framework.
The RSL has its seed in similar regimes employed in Singapore, the UK and Australia and is open to all innovators, with a particular focus on attracting blockchain innovators across all spheres.
The Mauritian Government hopes that by assisting to progress such projects the direct and indirect revenues raised will be the engine that drives local and international business enabling it to foster a smart city concept with links to other hub cities.
To be considered for approval for an RSL in Mauritius you must show:
(a) that the project is innovative
(b) that the project is beneficial to the Mauritian economy
(c) that the project cannot be accommodated in your home jurisdiction because of legal or regulatory gaps.
Assuming you provide the Regulator with all the necessary information they require (and that the application is successful) such a license can be obtained within as little as 30 days.
As things currently stand the securities laws in Mauritius are favorable in that a Utility Token doesn’t fall under the definition of a Security.
As such the Regulatory Sandbox License provides companies and startups with the opportunity to test innovative products, services, business models and delivery mechanisms in the real market, with real consumers, but with regulatory supervision.
In fact the Mauritius board of investment has publicly announced their desire to attract blockchain startups to Mauritius; Unlike other jurisdictions such as Switzerland, the UK and Singapore (where their sandboxes are aimed at companies in the financial services field), the Mauritius RS License is available not only to businesses innovating in the financial technology fields but also to businesses focused on digital identities, digital currency, online healthcare, blockchain and the decentralization systems of information (amongst others).
There is a selection criterion for an RSL as well as several conditions relating to the activity such as safeguards, terms and conditions, compliance with existing regulations, referring to general business operation and monitoring mechanisms (amongst others).
In summary its regulatory sandbox framework makes Mauritius one of the most attractive jurisdictions for entities in the blockchain space which are seeking or looking to be regulated.
Why Set Up In Mauritius
Why should blockchain investors/entrepreneurs consider setting up in Mauritius? Because:
- Mauritius has a pro-business and healthy governance environment (its internationally recognized as the strongest in sub-Saharan Africa)
- Taking into account factors including ease of starting a business, enforcing contracts, obtaining credit, protecting investors and paying taxes Mauritius is considered to have the best business climate of any country in the region and ranks 49th out of 190 countries worldwide. (Source: The World Bank’s annual “Doing Business” survey)
- Mauritius is committed to ongoing development of the country’s communications infrastructure – including projects to roll out free Wi-Fi across the island and install fiber optic connections in every home (a key attraction for technology investors)
- Mauritius is the ideal doorway for investment into Africa and India (See below)
Access to Substantial Markets
Its political/economic stability and geographic location have enabled Mauritius to develop into a popular venue for financial services companies looking to make the jump into new markets on the African continent (where many of the world’s largest untapped Banking/Retail Investment customer populations exist).
Simply put Mauritius is a country that many of the governments of African states would like to emulate; if you have systems that have been tested properly in Mauritius – it gives a kind of assurance and credibility to that solution when you market it in Africa. (As the BIOM itself puts it “Having done it in Mauritius gives it lots of mileage for you to expand into Africa.”)
Other advantages to using Mauritius as the springboard for investment into Africa include:
- Mauritius possesses a bilingual workforce speaking both English and French (two of the African continent’s most spoken languages)
- Mauritius has tax treaties with more than 20 African nations including South Africa, Zambia, Uganda and Rwanda.
Mauritius also boasts very close cultural and economic ties with India – whose economy is projected to surpass China if/when it becomes, as predicted, the world’s most populous nation in the next ten years (approximately two-thirds of Mauritians are of Indian descent)
Mauritius has also been the largest single source of foreign direct investment into India in recent years on account of its having a (very) favorable double taxation avoidance treaty with India (which can be accessed via incorporation and deployment of a Mauritius GBC 1 Company – contact us for details).
ICOs in Mauritius are commonly registered/licensed under the umbrella of a Mauritius Foundation.
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