The Government of Nauru has established a regulatory body known as Command Ridge Virtual Asset Authority (CRVAA) to oversee activities involving digital assets.

Formal Oversight for the Crypto Sector

This move aims to formalize oversight within the growing crypto sector. The newly formed CRVAA will supervise the licensing of crypto service providers operating in or from Nauru.

The new legal framework mandates that a broad range of virtual asset-related activities, including cryptocurrency exchanges, token offerings, lending platforms, staking, non-fungible tokens, and decentralized finance services, must obtain authorization from CRVAA. The regulator will also oversee stablecoin issuance, digital banking operations, and cross-border payment solutions.

Cryptocurrency as a Commodity

The legislation classifies cryptocurrencies as commodities rather than securities, thus excluding payment tokens from being considered investment contracts. This classification determines how such assets are treated under Nauruan law.

Nauru, situated in the western Pacific and covering just 21 square kilometers with a population of around 12,500, previously allowed crypto activities without a defined regulatory framework. With this legislation, Nauru joins other Pacific jurisdictions that have adopted formal rules governing virtual assets.

Economic Diversification

The Government representatives stated that the creation of CRVAA aligns with national interests in diversifying income sources and improving economic resilience. Given Nauru’s status as one of the most vulnerable countries according to the United Nations Multidimensional Vulnerability Index, this regulation is seen as a critical step.

In recent years, Nauru garnered attention in the crypto space due to unrelated plans by Gabriel Bankman-Fried, brother of former FTX CEO Sam Bankman-Fried. Legal documents from mid-2023 revealed discussions between Gabriel and a former FTX Foundation official about purchasing Nauru with funds from the now-defunct exchange.