Good news! In the Times of meme coins and fraud businesses, this bill was greatly needed. Crypto market is full of scammers and fraudsters. Many have used a Seychelles licence to get away after the crime. That's something the government needed to stop.
I don't think Seychelles will become a crypto hostile country with this new legislation. It's just that they are tightening their grip on illegal crypto programs without any physical existence.
Scammers have a way of abusing privileges granted by some crypto-lenient nations. The government is taking the right step to protect its citizens from scammers by making this law. But these law shouldn't be very stringent because it could scare away investors. Besides making protective laws, there is also the need to promote crypto education in the East African country. This is because scammers can easily deceive ignorant people.
If an exchange does not comply with FATF regulations, that exchange will have problems in other jurisdictions.
Every day there will be fewer large exchanges that want to operate without KYC.
The wild west in the crypto world will soon be over, but the good news is that cryptocurrencies are with us for a long time now.
Some countries don't want to be included in the black or grey list of The Financial Action Task Force (FATF). Landing on this list can scare away investors as well as deprive the country of the privilege of accessing loans and grants from international organizations. This is why countries will do everything possible including enacting anti-crypto laws claiming to be combating money laundering. Many African countries are on FATF's grey list, Seychelles, which is one of the fastest growing economies in Africa, doesn't want it to be included in the list.
I don't think this point will be a big problem for crypto exchanges, having a resident manager and an office with enough staff means paying more money and there will be companies specialized in providing such services. I think this particular item will contribute to tourism and opening more job opportunities in Seychelles more than it helps in reducing scam.
The government want to have people in the country that they can hold responsible if anything goes wrong. The resident managers serve as guarantors of the business in the country.