Cryptocurrency regulations proposed by Rwanda
In a significant move towards financial regulation, Rwanda's Capital Markets Authority (CMA) and National Bank of Rwanda (NBR) have announced the enforcement of a draft law to regulate virtual assets. The new regulations, effective from March 3, aim to regulate digital assets rather than eliminate them, acknowledging their growing use within Rwanda's borders.
Until now, cryptocurrencies in the country have been unregulated, with transactions involving digital currencies officially banned. However, the new regulations do not indicate any lifting of the existing ban on cryptocurrencies in Rwanda.
The draft regulations include guidelines for the issuance of initial coin offerings, tokenized real-world assets, and stablecoins. The CMA and NBR have requested public comments on the new law to be submitted before March 14. A virtual consultation meeting is scheduled to discuss the draft law on March 17.
Operators of unlicensed Virtual Asset Service Providers (VASPs) in the country risk fines of up to 30 million Rwandan francs ($21,000) and up to five years in jail. Virtual Asset Service Providers in Rwanda are now asked to apply for licenses from the CMA or face prosecution.
The CMA's licensing and approvals manager, Carine Twiringiyimana, stated that the Financial Action Task Force's warning on the money laundering risks that crypto poses was a major motivation for the law's passing. The enforcement of the travel rule is mandated among licensed VASPs and regulators, requiring exchanges to collect and share information on individuals that transact with cryptocurrencies.
While the exact requirements for VASPs to obtain a license from the CMA under the new draft law are not yet clear, it is reasonable to expect similar requirements to those found in other jurisdictions. These typically include establishment as a legal entity, maintaining AML/KYC policies, appointing a local representative or compliance officer, maintaining professional liability insurance and/or meeting minimum financial thresholds, subjecting to external audits and reporting obligations, implementing robust cybersecurity and data protection measures, and registering the business formally with the regulatory authority and adhering to reporting suspicious transactions.
Last year, the governor of the NBR, John Rwangombwa, mentioned that the bank was working on crypto regulations that could come into effect as early as the first quarter of the year. In 2023, the Rwandan Investigative Bureau (RIB) arrested and prosecuted a finance executive for illegal currency sales, money laundering, and fraud.
For accurate, authoritative details, it is best to consult the official CMA Rwanda website, the draft law text when published, or official government publications related to the virtual assets regulatory framework in Rwanda. It is important to stay informed as these developments unfold to ensure compliance with the evolving regulatory landscape.
- The new regulations enforced by Rwanda's Capital Markets Authority (CMA) and National Bank of Rwanda (NBR) aim to regulate digital assets, particularly cryptocurrencies, within the country.
- The draft regulations include guidelines for the issuance of initial coin offerings, tokenized real-world assets, and stablecoins, and operators of unlicensed Virtual Asset Service Providers (VASPs) risk fines of up to 30 million Rwandan francs ($21,000) and up to five years in jail.
- Despite the new regulations, transactions involving digital currencies remain officially banned in Rwanda, and it is not yet clear what exact requirements VASPs must meet to obtain a license from the CMA under the new draft law.
- Similar to regulations in other jurisdictions, the new draft law may require VASPs to establish as a legal entity, maintain AML/KYC policies, appoint a local representative or compliance officer, and subject to external audits and reporting obligations, among other requirements for cybersecurity, data protection, and formal business registration.
