The Seychelles Financial Services Authority (the FSA) via Circular No. 3 of 2025 has provided much awaited clarity in respect of treatment of Contract for Differences (CFD) where the underlying asset is a Virtual Asset (VA) as defined under the Virtual Asset Service Providers Act, 2024 (VASP Act).
The Financial Services Authority (FSA) has determined that Contract for Differences (CFDs) with VA as the underlying asset should NOT be considered as a virtual asset service under the VASP Act. The FSA has relied on the following reasons to make this determination:
- Nature of CFDs: CFD as an instrument does not involve the actual purchase of VA. Rather, it allows the trader to speculate on the price movements of that asset. The trader enters into a contract with a broker and the contract value is determined by the difference between the opening and closing prices of the underlying VA.
- Speculation without ownership: Traders do not own the VA itself but instead trade on price changes. The price of the CFD is tied to the price of a particular VA.
- No physical delivery: There is no physical exchange of the underlying VA as it is purely a financial contract.
- No blockchain involvement: The undertaking of the CFDs does not occur on any blockchain platforms, but rather platforms that provide access to speculate on prices only.
In contrast to the above, virtual asset services entail undertaking of buying, selling and trading of VAs on a blockchain. The buying, selling or trading of VAs involves ownership changes (transfer of asset) and their liquidity/value is based on the popularity or frequency of trade.
The FSA further noted that section 8 of Schedule 1 of the Securities Act, 2007 governs the offering of CFDs. Further to subsection (b)(i), the phrase "property of any description" permits a licensee under the Securities Act, 2007 to offer CFDs within the context of Schedule 1 without making a distinction on the types of underlying assets. Therefore, any property in any form or manner that can be speculated against price movements can serve an underlying asset for CFD and this includes VAs.
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