Nauru has created the first cryptocurrency regulator in the Pacific region.

The Parliament of the Republic of Nauru has created a special body to regulate digital assets – the Virtual Assets Management Command-Ridge (CRVAA). This decision made Nauru the first state in the Pacific region to introduce an independent regulator for the virtual assets market, digital banking, and Web3 innovations.

CRVAA, named after the highest point of the island — Command Ridge, will be responsible for licensing virtual asset providers (VASP), allowing companies to register and operate from Nauru.

The President of Nauru, David Adeang, noted that the new regulator is a “bold step towards diversifying revenues and strengthening the economic resilience” of a state that is listed among the most vulnerable countries in the world according to the UN MVI index.

“We strive to be a government of solutions and innovations, to be proactive rather than passive, and to look to the future with courage,” said Adeang.

The Minister of Trade and Foreign Investments, Maverick Eoe, added that more and more countries are recognizing the potential of virtual assets, particularly in the field of decentralized finance (DeFi).

“This bill creates a foundation that will place Nauru alongside countries leading in the development of the digital economy and profiting from such innovations,” he said.

The feature of the law is the principled distinction of tokens: cryptocurrencies are considered goods, not securities, and payment and utility tokens are not regarded as investment contracts. This provides legal certainty for businesses and makes erroneous classification of tokens impossible.

CRVAA will also be responsible for:

It should be noted that Nauru was once part of the plans of Gabe Bankman-Fried, the brother of FTX founder Sam Bankman-Fried. He considered the possibility of acquiring the island to build a bunker “in case of apocalypse” using funds from the bankrupt cryptocurrency exchange.