Vanuatu Crypto Company | What Foreign Owners Should Know

Using a Vanuatu Company for Crypto: What It Actually OffersCopy link to section

A Vanuatu crypto company now operates under one of the more developed legal frameworks in the Pacific, following Parliament's passage of the Virtual Asset Service Provider Act (Act No. 3 of 2025) on 26 March 2025. This made the country the first Pacific island nation with a standalone, comprehensive law for virtual asset services, and it changed the calculus for any foreign founder weighing the jurisdiction. The law is gazetted and binding, with the Vanuatu Financial Services Commission as the licensing authority.

The headline attraction is fiscal: no corporate tax, no capital gains tax, and no personal income tax for non-residents, layered onto an offshore financial center with roughly 2,300 registered institutions and over 3,700 international companies. The corporate vehicle is an International Business Company under the International Companies Act [CAP 222], registered with the VFSC.

What has changed is the supervision. The jurisdiction is no longer lightly regulated; the 2025 Act sorts crypto activity into defined licence categories and demands real operational substance, including local personnel. This article explains how token issuance, trading, exchange operation, licensing, substance, banking, and reputation play out for a foreign-owned crypto firm, and where the fit breaks down.

It is most relevant to founders building Asia-Pacific–facing virtual asset businesses who can fund a serious licence application and physical presence, and who do not depend on EU market access.

Token and NFT Issuance Through a Vanuatu EntityCopy link to section

The Act creates a dedicated licence class for Initial Token Offerings (ITOs), and only a company can hold it. Sole traders and individuals are barred from issuing an ITO, so the corporate structure is a precondition, not a convenience.

Issuance, trading, custody, and transfer of virtual assets all fall inside the regime. NFTs are explicitly covered as unique digital tokens representing art, collectables, or tokenized assets, and an NFT marketplace operating under a VASP licence must follow the same AML and counter-terrorist-financing rules as any other licensee.

The Act defines virtual assets as digital representations of value usable as a medium of exchange, unit of account, or store of value. It deliberately excludes digital representations of fiat currencies, securities, and central bank digital currencies, which creates two practical boundaries you need to map before structuring a token.

• A token that confers equity or debt rights may be a security, pulling it under the Financial Dealers Licensing Act and the Dealers in Securities (Licensing) Act [CAP 70]. The VASP framework does not displace securities law, and that overlap needs separate legal analysis.
• Non-custodial DeFi protocols sit in an unsettled zone. A pure on-chain protocol may fall outside the licensing perimeter until the regulator scrutinises it more closely, but that is an absence of clarity rather than a safe harbour.

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Holding and Trading Digital Assets Under a Tax-Neutral RegimeCopy link to section

For a company holding or trading digital assets, the tax position is clean at the entity level. There is no corporate tax, no capital gains tax, no income tax on crypto trading, and no VAT on the purchase and sale of digital currencies. Dividends paid out by a crypto firm are not taxed, and there is no withholding tax on outbound dividends, interest, or royalties to non-residents.

The domestic VAT rate is 12.5%, but it does not bite on the buying and selling of digital currencies. For a non-resident-owned trading or treasury entity, the meaningful tax friction is rarely inside the jurisdiction.

The real exposure sits elsewhere. The country has no comprehensive double-tax treaty network with any major economy, so payments flowing into a Vanuatu entity from a treaty-network country such as Australia, Japan, or India may carry source-country withholding that cannot be reduced. The zero-tax wrapper does nothing about tax imposed at the payer's end.

No corporate tax has been announced, and the policy logic is structural rather than promotional: an economy built largely on subsistence agriculture has little to gain from layering income tax onto it. Tax neutrality here is durable, but it is neutrality on profit, not protection against counterparty-side deductions.

Running an Exchange or Web3 Venture from VanuatuCopy link to section

Operating an exchange or custody business is the heaviest path, and the structure is stacked by design. VASP licences are issued only to firms that already hold all four Financial Dealer Licensing classes (A, B, C, and D), so an exchange operator effectively applies for the full FDL package and the VASP authorisation together.

Since the FDL Amendment Act No. 5 of 2024, a Class D licence depends on holding Classes A, B, and C first. The Class D licence is what authorises distribution, secondary trading, custodial storage, and investment advice in relation to digital assets.

The VFSC application is demanding. Expect to submit:

• A detailed business plan covering the operating model, technical infrastructure, three-year financial forecasts, and a risk analysis.
• Full corporate documentation for the registered entity, plus KYC and AML policies.
• Personal documentation for every director and beneficial owner, including police clearance certificates.
• A security deposit of approximately 5,000,000 VUV (around USD 45,000 to 50,000) held by the regulator for the life of the licence.

Operational conditions follow the grant. A Class D holder must run a physical office in the jurisdiction with key personnel present, keep a separate escrow account for investor funds subject to annual independent audit, appoint a dedicated compliance officer, and register with the Vanuatu Financial Intelligence Unit. Operations must commence within three months of the licence being issued.

The Travel Rule applies in full: a VASP must collect and transmit sender and recipient information for transfers above USD 1,000 or EUR 1,000. The regulator is candid that the process is intentionally arduous to screen out all but serious applicants, because supervisory capacity is limited.

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The VASP and Virtual-Asset Licensing PositionCopy link to section

The governing statute is the Virtual Asset Service Providers Act No. 3 of 2025, fully in force, with the VFSC empowered to enforce FATF AML, counter-terrorist-financing, and Travel Rule standards. AML obligations run through the Anti-Money Laundering and Counter-Terrorism Financing Act No. 13 of 2014 as amended, with reporting to the Financial Intelligence Unit.

The Act sets out six licence types, each mapped to an activity:

Licences run for 12 months and must be renewed by the anniversary of issue. Minimum unimpaired capital is generally understood to be around USD 500,000 (VUV 200 million), certified by an external auditor, though the threshold varies by licence class and you should confirm current VFSC guidance before budgeting.

Applicants must also disclose independent assurance on technical infrastructure, covering smart contract defects, protocol scalability, interoperability, and code security. Processing typically takes three to six months once the AML and KYC policies and business plan are in place.

Operating without a licence carries real consequences: penalties of up to 250 million vatu (about USD 2 million) and up to ten years in prison. Crypto activity was once banned outright here as a precaution, and the regime that replaced that ban is correspondingly strict.

Economic Substance Expectations for Crypto OperatorsCopy link to section

Substance is not an afterthought; for a licensed VASP it is wired into the licence itself. The conditions of operation already require a physical office, a resident chief technology officer, a resident or qualified director, a dedicated compliance officer, and annual independent audit of escrow and investor funds.

Alongside this sits the Resident Entity (Economic Substance) Act of 2024, which obliges resident entities carrying on certain activities to meet substance tests. The bill references "Cooperative Jurisdictions," signalling alignment with OECD and EU substance expectations.

Two points need confirmation from local counsel rather than assumption. First, whether crypto is classified as a "financial services" or an "intellectual property" activity under the Act matters, because the legislation flags a heightened test for high-risk IP entities, and an IP-holding token project could be caught. Second, the exact activity categories and the difference between reduced and full substance tests are not published in retrievable detail.

The practical takeaway is straightforward: meeting the VASP licence conditions will carry you a long way toward substance, but the standalone Act may impose more, and a token-issuing structure holding valuable IP deserves specific advice before incorporation.

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Crypto On-Ramps, Off-Ramps, and Stablecoin RailsCopy link to section

Banking is where many offshore crypto firms stall, and a licence here helps without solving it. Plan your banking strategy before you incorporate, not after.

Domestically, the principal commercial banks are BSP (Bank of South Pacific) and ANZ Vanuatu. Both can provide local acquiring and settlement in vatu for in-person sales, and BSP offers POS terminals, but neither is a specialist crypto banking partner.

Global payment processors are a partial answer. Adyen and Stripe support multi-currency and subscription billing through regional banking partnerships, but their acceptance of a crypto company account tied to the jurisdiction depends on their own high-risk underwriting and is not guaranteed. There is no public confirmation that crypto-native banks such as Sygnum or SEBA onboard licensees here as a standard product, and that gap is a material due-diligence item.

On the regulatory side, a licensee will need transaction-monitoring software such as Chainalysis or Elliptic to satisfy VFSC expectations. Merchant account opening runs through compliance with rules overseen by the Reserve Bank of Vanuatu and international AML standards.

Reputation, Counterparty Due Diligence, and Listing HurdlesCopy link to section

The jurisdiction's standing is mixed, and it matters more than the tax rate. On the positive side, it exited the FATF grey list in 2018 after legislative reform and does not appear on the FATF grey list or blacklist. The OECD Global Forum has assessed its framework for automatic exchange of financial account information as in place and consistent with requirements.

The European picture is the problem. The country has sat on the European Commission's AML high-risk list since September 2016 and on the EU list of non-cooperative jurisdictions for tax purposes since March 2019, remaining through every later iteration. The EU list has been distinct from the FATF list since 2018, which is why the country can be clear of FATF concerns yet still flagged by Brussels.

This is a live operational constraint, not a footnote. Under the EU's 4th and 5th AML Directives, EU-based banks, exchanges, and institutional counterparties must apply enhanced due diligence to entities from the jurisdiction, which deters some partners and complicates EU-licensed exchange listings.

Banks, processors, and institutional partners now ask hard questions of any licensee. A licence helps build banking relationships across the Asia-Pacific region, but it changes how counterparties assess you rather than removing scrutiny. An Asia Pacific Group money-laundering assessment is scheduled for 2026, and its outcome could move the standing further in either direction.

Where Vanuatu Falls Short for Crypto and Practical WorkaroundsCopy link to section

Several weaknesses are structural and worth naming plainly.

• EU access. The dual EU listings force enhanced due diligence on your entity, which can block EU bank correspondents, EU-licensed exchange listings, and EU market access outright.
• No treaty relief. With no comprehensive double-tax treaty network, inbound payments from high-withholding countries may be taxed at source with no treaty to reduce them.
• Banking depth. No major crypto-specialist bank is publicly known to onboard licensees as a standard product, so correspondent banking must be arranged deliberately.
• Stacked licensing. Requiring all four FDL classes before a VASP grant doubles cost and burden for entrants who do not already hold them.
• No investor compensation scheme. Virtual asset investments carry no statutory compensation protection, which institutional counterparties notice.
• Thin case law. The hybrid civil-common law system has limited English-language precedent on crypto disputes, and enforcement of foreign judgments is restricted.

Founders address these in predictable ways. A common pattern is to use the local entity for Asia-Pacific–facing operations and pair it with a BVI, Cayman, or MiCA-licensed entity for EU and institutional access. Correspondent banking is often routed through Cayman, Malta, or UAE arrangements, and Chainalysis or Elliptic coverage is added to satisfy counterparty diligence.

Supervisory capacity is also a constraint by the regulator's own admission. Few licences will be issued, and processing delays are possible, so timelines should be planned conservatively.

Alternative Jurisdictions Worth Weighing Against VanuatuCopy link to section

No single jurisdiction wins on every axis, and the right comparison depends on where your customers and counterparties sit.

If EU passporting is the goal, a MiCA CASP licence from Lithuania, Malta, or the Netherlands passports across the bloc, and the Pacific option offers no equivalent. For Asia-Africa-facing businesses, Mauritius pairs a developed VASP regime with the treaty network the Pacific jurisdiction lacks. The case for the latter is narrower: an Asia-Pacific operating base where tax neutrality and a standalone crypto law outweigh EU exclusion and banking friction.

ConclusionCopy link to section

The honest read is that the jurisdiction now has a serious crypto law and a genuinely tax-neutral wrapper, but it buys you an Asia-Pacific operating base rather than global reach. The stacked FDL-plus-VASP licensing, full substance obligations, and standing EU listings mean it suits a well-capitalised founder serving Pacific and Asian markets, not one chasing European customers or institutional listings.

Before committing, weigh whether your counterparties and banking partners can live with the EU enhanced-due-diligence flag; if EU access matters at all, a paired structure with a MiCA or Cayman entity is the question to resolve first.

How Expanship Can Help Your Business in VanuatuCopy link to section

Expanship supports foreign founders through the full path of standing up a crypto company here, from incorporating the International Business Company to assembling the documentation, business plan, and AML and KYC policies a VASP application requires, and on into the local presence and reporting the licence demands. The same team handles the wider needs of a foreign-owned entity once it is running.

• Company incorporation and structuring for a virtual asset business
• Registered agent and local registered office
• Economic-substance support and tax registration
• Ongoing compliance management, including VFIU and annual reporting obligations
• Accounting and bookkeeping, including audit coordination for escrow accounts
• Banking and payment-processor introductions

To discuss whether the jurisdiction fits your crypto venture and how to structure around its limits, contact Expanship Vanuatu.

Frequently Asked QuestionsCopy link to section