Nauru has become the first Pacific nation to establish a dedicated regulatory authority for virtual assets. The Pacific nation of Nauru passed legislation on June 17 to create the Command Ridge Virtual Asset Authority, an autonomous body that will oversee cryptocurrency, digital banking, and Web3-related services. Under the new law, the CRVAA will introduce a licensing regime for virtual asset service providers, allowing them to register and operate using Nauru as a legal base. Although cryptocurrencies were already legal in Nauru, trading until now existed in a largely unregulated environment, with no specific oversight, licensing requirements, or regulatory framework in place. Under the new legislative framework, legal definitions have been introduced for various crypto-related activities. Cryptocurrencies are classified as commodities rather than securities, while utility and payment tokens are excluded from investment contract status. Governance tokens are defined as instruments that confer voting rights within a protocol, and, along with reward tokens, are protected from misclassification, giving issuers legal clarity. Activities subject to CRVAA oversight include operating centralized and decentralized exchanges, offering wallet services, conducting initial coin offerings, issuing non-fungible tokens, and engaging in staking, yield farming, and stablecoin issuance. The authority will also regulate cross-border payment solutions and the operation of digital banks and e-money platforms. You might also like: SEC Chair Atkins reaffirms promise to end ambiguity in crypto regulation. The CRVAA will also be responsible for enforcing anti-money laundering and financial transparency standards. The legislation mandates strict cybersecurity protocols and transaction monitoring to ensure compliance with international norms. According to the country’s president, David Adeang, the new legislation would help diversify revenue streams and improve economic resilience by “harness[ing] the potential of virtual assets” and reducing reliance on “climate financing, which is often challenging to secure.” “We want to be a government of solutions and innovation, be proactive not passive, and positively approach the future with boldness,” Adeang said. Meanwhile, Commerce and Foreign Investment Minister Maverick Eoe believes the framework would make Nauru competitive with leading digital economies, and potentially attract investment and create local employment opportunities. Before embracing digital asset regulation, Nauru made headlines for a more surreal reason. In 2023, court filings revealed Gabriel Bankman-Fried’s idea to purchase the island and establish a remote enclave, funded by the now-defunct FTX Foundation. The proposal was ultimately abandoned. As cryptocurrencies move further into the financial mainstream, more jurisdictions are establishing dedicated regulatory bodies to bring structure, oversight, and investor protection to the sector. Last month, Pakistan approved the formation of a national digital assets authority to regulate its crypto ecosystem. Earlier this year, U.S. President Donald Trump signed an executive order forming the President’s Working Group on Digital Asset Markets, a multi-agency panel including the Treasury, SEC, and CFTC, tasked with recommending a comprehensive federal framework for digital assets. Read more: New York Attorney General urges Congress to pass crypto regulations