meta_id 3168794

On May 20, 2026, the Seychelles Financial Services Authority (FSA) issued a public statement clarifying the regulatory status of stablecoins under the Virtual Asset Service Providers (VASP) Act. The FSA confirmed that stablecoins, in their current form and usage within the domestic market, are not classified as "virtual assets" under the VASP Act and therefore do not fall within the scope of VASP licensing or regulatory requirements. The FSA's position is based on the functional characteristics of stablecoins. The VASP Act defines virtual assets as digital representations of value that can be digitally traded or transferred for payment or investment purposes, excluding digital representations of fiat currencies, securities, and other financial assets. Stablecoins are typically pegged to reference assets such as fiat currencies or commodities and function primarily for value preservation rather than as speculative digital assets. Most stablecoins operate as digital representations of fiat value, are redeemable for equivalent underlying assets, and lack the characteristics of open-market virtual assets such as price volatility or speculative trading value. Consequently, they fall outside the Act's scope. However, VASP-related services provided in respect to stablecoins—including exchanges, brokering, custody, and investment advice—would require VASP licensing depending on the scope of activities undertaken. The FSA emphasizes caution regarding stablecoin risks to consumers and investors, including counterparty risk associated with issuers, lack of transparency on backing reserves, redemption delays or failures, exposure to foreign regulatory decisions, and cybersecurity and operational risks. The FSA encourages members of the public and businesses uncertain about whether their activities fall under the VASP Act or other regulatory frameworks to seek guidance from the Authority and request formal classification or regulatory interpretation where necessary.