“Stablecoins are the next major development in digital finance”

Could you introduce yourself, your role in the Policy Group, and explain how it aligns with your mission to influence global policy frameworks in digital finance?

I founded the Policy Group earlier this year with a diverse team of experts worldwide. The primary objective was to provide jurisdictions with comprehensive support in understanding and implementing digital finance frameworks. During the Commonwealth Heads of Government Meeting (CHOGM) in 2022, Baroness Patricia Scotland approached me to draft a model law on virtual assets. Although my background is in banking and asset trading, and not law, I felt well-positioned to tackle this challenge, given my extensive experience with various asset classes.

Our team, which included top professionals like the Solicitor General of Mauritius, Rajesh Ramloll, worked pro bono to draft this law targeting all 56 countries of the Commonwealth. This represents a population of 2.8 billion people, of which 1.5 billion are under 30 and increasingly engaged with digital assets. Our model law is designed as a toolkit adaptable for both common law and civil law countries. However, it’s crucial to understand that this is not a “copy and paste” solution; effective implementation requires a nuanced understanding of local contexts. I work closely with multiple jurisdictions, including Mauritius, to help regulators and policymakers navigate the complexities of digital finance laws. The objective is to ensure that these jurisdictions are not grey-listed by organisations like the Financial Action Task Force (FATF), the Financial Stability Board (FSB), and the International Organization of Securities Commissions (IOSCO), which have set specific standards for virtual or crypto assets.

How does your partnership with the Commonwealth contribute to developing economic strategies in emerging markets?

The Commonwealth has played a pivotal role in promoting changes within the digital finance sector since 2014. In 2022, I was given the mandate by the Commonwealth Secretariat to draft a law on virtual assets. I gathered a team of remarkable professionals, including the Solicitor General of Mauritius, who chaired the group. The Commonwealth, with its 2.8 billion people, is seeing the most rapid adoption of digital and crypto assets, particularly in emerging markets. With around 1.5 billion people already using digital assets, it is evident that this sector is here to stay. Therefore, it is vital to harness its opportunities while mitigating risks.

In many emerging markets within the Commonwealth, there is a stark contrast to the slower adoption seen in developed countries like the United States and Australia, where crypto assets are often viewed as speculative. In emerging markets with fractured banking systems, mobile devices are prevalent, enabling secure and intermediary-free value and information transfers 24/7. The rapid emergence of digital money and mobile payments is a game-changer in these regions, presenting unique use cases that are far more dynamic than those seen in more developed economies.

By establishing itself as a compliant jurisdiction, Mauritius could serve as a digital finance hub connecting Africa and India

Mauritius was among the first countries to regulate virtual assets and cryptocurrencies. Could you elaborate on its early regulatory efforts and the challenges and opportunities that lie ahead?

Mauritius was the third country to introduce a comprehensive regulatory framework for digital assets in 2018, pioneering the use of the term “digital assets” to describe this new asset class. Initially, there was no clear global definition, and jurisdictions adopted varied terminologies such as “exchanges,” which differ from traditional securities exchanges that do not inherently take risks unless they act as custodians.

The FATF’s 2019 definition of a virtual asset – “a digital representation of value that can be traded, transferred, or used for payments or investment purposes” – has now become the standard. Many countries are currently trying to fit these assets into existing legal frameworks, often incorrectly, as crypto assets are not always securities or commodities. Regulatory clarity is essential to avoid greylisting, which could hinder economic growth by allowing unregulated foreign operators to exploit local markets without contributing to the economy or adhering to tax laws. For this reason, any legal framework must ensure that directors are domiciled within the jurisdiction to enforce accountability.

You mentioned earlier that stablecoins could be the next significant development in digital finance. How do you see their role in Mauritius and globally?

Stablecoins are indeed the next major development in digital finance. Unlike cryptocurrencies, which are highly volatile, stablecoins are typically asset-backed, often pegged to stable currencies like the US dollar. They have the potential to solve central banking problems in emerging markets by providing much-needed liquidity, particularly in areas where access to US dollars is limited. Properly regulated and collateralised stablecoins could facilitate cross-border funding and create new growth opportunities.

Mauritius, with its strategic location and mature financial infrastructure, is ideally positioned to capitalise on these trends. By establishing itself as a compliant jurisdiction, Mauritius could serve as a digital finance hub connecting Africa and India. I see great potential in the region to foster innovation and attract major players in the digital finance ecosystem.

What makes Mauritius a preferred destination for digital finance initiatives?

Mauritius is uniquely positioned between Africa and India, offering a mature financial infrastructure and adherence to all major global standards, making it an ideal location for digital finance. Mauritius can leverage its strengths to lead Africa in this field, particularly given that many African countries lack the resources or expertise to develop regulatory frameworks independently.

By providing a standardised and harmonised regulatory framework, Mauritius can attract entrepreneurs and innovative projects that foster economic growth across the region. This approach moves beyond traditional finance to establish Mauritius as a leading centre for digital finance.

What do you see as the primary challenges and opportunities in developing comprehensive legal structures for virtual assets?

One of the main challenges in developing legal structures for virtual assets is the diversity and complexity of this asset class. Different regulatory bodies have varying definitions: the FATF talks about “virtual assets,” the FSB uses the term “crypto assets,” and IOSCO refers to “digital assets.” The distinctions matter because these terms encompass a wide range of financial products, from payments to securities, and each requires a tailored regulatory approach.

Another challenge is the need for regulatory bodies to understand the underlying technology. Many regulators are not technologists, leading to overly broad or restrictive policies that stifle innovation. To address this, jurisdictions like Mauritius must adopt flexible frameworks that accommodate the unique characteristics of digital assets while ensuring robust consumer and investor protection.

Mauritius presents a unique opportunity to become a leader in digital finance, offering a combination of strategic location, strong infrastructure, and compliance with global standards. As the landscape of digital finance continues to evolve, Mauritius can play a pivotal role in fostering innovation, attracting investment, and driving economic growth across Africa and beyond.