Nauru Makes Waves by Establishing Virtual Asset Regulator

Nauru, the world’s smallest republic is making big moves in the digital asset space by passing the Command Ridge Virtual Asset Authority Act 2025 to establish the Command Ridge Virtual Asset Authority (CRVAA) (named after the island's highest point). The move makes Nauru the first Pacific nation to establish an autonomous regulator for digital assets aimed at attracting cryptocurrency businesses to establish and operate from the island in a similar manner to Dubai's Virtual Asset Regulatory Authority.

The regulator and the Act are named after Naura's highest point and the Act comes in at a meagre 11 pages conferring on the CRVAA significant powers to establish and regulate the virtual asset sector. According to Section 3 of the Act, the purposes of the CRVAA are to:

1. establish a competitive, future-oriented digital economy;

2. position Nauru as a jurisdiction for virtual asset innovation and operations;

3. enable the operation of secure, transparent and efficient virtual asset markets;

4. provide a framework for consumer and investor protection in virtual assets;

5. establish a regulatory framework for the operations of virtual asset services and associated technologies; and

6. create the CRVAA and define its functions and powers.

The CRVAA is given broad powers to, among other things:

• monitor compliance by Virtual Asset Service Providers (VASPs) with international standards, including those set by the Financial Action Task Force (FATF) and data protection regulations;

• grant, suspend, vary or revoke licenses;

• determine permitted and prohibited virtual asset activities;

• regulate token issuance, exchanges, staking, decentralised finance (DeFi) activities and NFT marketplaces;

• publish compliance guides;

• establish a virtual asset innovation sandbox; and

• maintain the national virtual asset register.

As part of its supervisory, compliance and enforcement role, the CRVAA is empowered to conduct audits, freeze, suspend or terminate suspicious activities, issue cease and desist orders, impose fines or bans, initiate legal proceedings and report suspected criminal activities to the Nauru Police Force.

With regulatory certainty as its selling point, Nauru is positioning itself as a licensing hub for crypto companies in the Pacific. President David Adeang stated:

By implementing robust oversight of VASPs, Nauru aims to foster sustainable growth, channel new financial inflows into strategic instruments such as its Intergenerational Trust Fund, and reduce its reliance on climate financing, which is often difficult to secure.

The licensing framework….ensures Nauru becomes a competitor, attracting businesses that bring investment, job creation, and financial innovation.

Cryptocurrencies are expected to be classified as commodities by default , meaning that utility and payment tokens are excluded from the status of investment contracts. However, the following activities are subject to regulation:

1. operation of centralised or decentralised virtual asset platforms;

2. exchange of virtual assets or fiat currencies;

3. custodial and non-custodial wallet services;

4. token issuance, including Initial Coin Offerings (ICOs) and NFT minting;

5. lending, staking, yield farming and other DeFi services;

6. stablecoin issuance and cross-border payment solutions; and

7. any other services prescribed by regulations.

Ultimately, the passage of this legislation reflects a broader global trend toward bringing crypto into mainstream finance, aligning with developments such as the GENIUS Act recently passed in the United States Senate which aims to regulate stablecoins. By establishing a flexible regulatory framework and bespoke regulator, Nauru is opening its doors to crypto businesses and positioning itself as a hub for innovation and investment in the virtual asset sector.

By Steven Pettigrove, L Misthos and E Assaf