New Commonwealth model law to help countries regulate virtual assets

The Bill was launched at a high-level event organised by the Commonwealth Secretariat at its headquarters in London on 8 July 2024.

Virtual assets are a relatively new part of the global financial sector. This makes regulation essential to protect consumers, combat illegal activity and maintain market stability.

Compliance with international standards

The Model Law takes a principles-based approach to regulating virtual assets, in line with international standards set by the Financial Action Task Force, a global regulatory body.

The Act contains a wide range of provisions, including licensing of virtual assets such as virtual currencies, specifying the obligations of issuers, supervising financial activities and enforcing penalties for non-compliance.

In particular, the Act provides guidance on establishing a framework to prevent the use of virtual assets for money laundering and terrorism financing, while protecting customers and providing legal clarity and certainty to businesses.

Commonwealth countries may use the law as a starting point to develop new legislation or adapt certain provisions of existing statutes to regulate virtual assets, with options available to be tailored to local needs.

Currently, 19 Commonwealth countries use this model law to develop new or amend existing national legislation.

Future framework

Speaking about the Model Bill, the Secretary-General of the Commonwealth, the Rt Hon Patricia Scotland KC, said:

“The Commonwealth is committed to helping its member countries take full advantage of the technological revolution, including virtual resources.

“This requires developing a regulatory framework. Approaching this country by country can be costly and time-consuming. By combining our knowledge and experience, we can create a robust framework faster, cheaper and more effectively.

“Our Model Law provides a forward-looking framework for Commonwealth countries to regulate virtual assets in line with international standards. This is key to strengthening harmonised regulation across the Commonwealth and creating a safe and transparent environment in which the benefits of virtual assets can be realised while mitigating the significant risks to our citizens.”

Harmonized regulations

While several Commonwealth countries have national virtual asset laws of varying scope, there is no binding regulation for all members. The Model Law aims to harmonize virtual asset laws to increase innovation, trade, and security across the Commonwealth.

Work on the draft Model Bill began in 2022 at the request of Commonwealth Law Ministers.

The Secretariat established a working group of 14 industry experts, including prominent lawyers, financial advisors and technologists. They worked pro bono to develop and finalize the complex model law text through consultations with the Secretariat and Member States.

During the event, the working group was also honoured with the Secretary General’s Pro Bono Heroes Awards for its interdisciplinary work on the Model Law.

Accepting the award, the group’s leader, Australian expert Loretta Joseph, described the model law as “a significant step forward in creating a coherent and comprehensive regulatory framework for virtual assets” in the Commonwealth.

She continued:

“Our collective efforts ensure that we not only keep pace with technological advances, but also set a standard that can be adopted worldwide to protect and support those using virtual resources.”

Commonwealth Deputy Secretary-General Professor Luis Franceschi praised the group’s members for their outstanding pro bono work.

He added:

“This model of pro bono collaboration set a high standard for the Secretariat. We have always wanted to work this way, to do more with less, to draw on the incredible expertise available across the Commonwealth to improve the lives of billions of people across the Commonwealth.”

Read a sample law on virtual assets

Members of the working group responsible for developing the model law

Read full biographies

1. Rajeshsharma Ramloll, Mauritius

Chairman of the Expert Working Group. Attorney General with extensive experience in tax and financial regulation, known for groundbreaking cases in Mauritius and contribution to the negotiation of international tax treaties.

2. Loretta Joseph, Australia

Commonwealth Pro Bono Service Provider. Financial services legal expert with over 25 years of experience, co-chair of the International Digital Asset Exchange Association and influential in global virtual asset policy development.

3. Kokila Alagh, United Arab Emirates

Founder of KARM Legal Consultants, a firm specializing in high-risk technology sectors and providing legal advice on financial technologies, artificial intelligence and virtual assets in the MENA region.

4. Maxine L Binns, Bermuda

Legislative Drafting Specialist. Barrister and lawyer with specialization in corporate and commercial law who played a key role in developing Bermuda’s financial regulatory framework.

5. Paul Derham, Australia

Managing Partner of a leading financial services regulatory law firm, advising global cryptocurrency and FinTech companies.

6. Ankita Dhawan, India

Legal consultant specializing in cryptocurrencies, artificial intelligence and financial services, advising virtual asset providers and representing large technology companies in antitrust matters.

7. Michelle Harwood, Australia

Financial integrity consultant and former Attorney General, specializing in anti-money laundering (AML) and counter-terrorism financing (CFT) and advising international organizations.

8. Jonathan Hatch, Australia

Senior lawyer specialising in financial services and technology, advising on regulatory matters relating to new technologies and innovation systems.

9. Yvan Jean Louis, Mauritius

Legal Drafting Specialist. Assistant to the Attorney General, specializing in international trade, financial services and representing Mauritius in international legal matters.

10. Ian Mathews, Great Britain

Expert in anti-money laundering (AML) and counter-terrorism financing (CFT) with extensive experience in the Polish Financial Supervision Authority and the European Commission, currently scientific expert at MONEYVAL.

11. Rick McDonell, Canada

Co-CEO of McDonell-Nadeau and Executive Director of ACAMS. Former Executive Secretary of the Financial Action Task Force (FATF). Known for his work with the FATF and the global development of AML/CFT standards.

12.Josee Nadeau, Canada

Co-CEO of McDonell-Nadeau, AML/CFT consultant and associate professor with extensive experience in FATF standards and international financial regulation.

13. Allan Prochazka, Canada

Managing Director at McDonell-Nadeau, providing strategic advice on financial policy and AML/CFT compliance, with experience in international financial regulation.

14. Joseph Weinberg, Canada

Co-founder of Shyft Network and a digital asset pioneer, advising on global regulatory and due diligence in the virtual asset industry.

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Contact with the media

• Snober Abbasi, Senior Communications Officer, Communications Division, Commonwealth Secretariat

• E-mail