Bank of Ghana issues draft guidelines for crypto regulation

Ghana has taken a step closer to cryptocurrency regulation. The country’s central bank, the Bank of Ghana (BoG), has released a draft guideline on digital assets regulation and asked industry players for contributions and suggestions on the proposed crypto rules.

The details

In an August 2024 circular, the BoG cited the surge in digital asset use in the past three years as motivation for establishing the proposed regulations. 

• In addition, it is drawing from the Financial Action Task Force’s (FATF) recommendation asking countries to limit the risks of digital assets by regulating and subjecting them to supervision and monitoring. 
• The BoG reiterated that local banks are still prohibited from facilitating crypto transactions. 

However, under the proposed guidelines, the banks would be permitted to offer financial services to licensed virtual assets service providers (VASPs). 

• Per the bank, the regulations will cover anti-money laundering and combating the financing of terrorism (AML/CFT) guidelines, compelling VASPs to implement strong know-your-customer (KYC) measures and conduct due diligence. 
• It will also mandate compliance with the FATF’s Travel Rule, which makes it compulsory for VASPs to share the information of individuals who transact on their platform and report suspicious activity. 

Beyond crypto assets, the BoG also wants to explore blockchain technology’s use cases in other areas of financial service delivery. 

• The bank concluded with a call for input from members of the public and industry stakeholders, asking them to send in suggestions and recommendations before August 31.

Key quote 

• The BoG said: 

“Following an extensive internal review of the surging popularity of digital assets 
like cryptocurrencies ... in Ghana, and engagements with various stakeholders, the Bank of Ghana issues draft guidelines on digital assets. These guidelines are intended to expose the Bank’s proposed regulatory measures and solicit feedback from industry and the 
public.” 

Why this matters 

• Crypto regulations are starting to take shape in African countries. Ghana is the latest to whip up guidelines for crypto rules after South Africa put its regulations into effect having licensed more than 130 crypto companies since the start of the year. 
• The use of cryptocurrencies in Ghana has been banned since 2022 with financial institutions strictly warned by the BoG not to engage in any crypto-related activity. 
• However, the Ghanian Security and Exchange Commission (SEC) set up a task force late last year to help it develop the capacity to regulate crypto assets. This was a move to keep in step with international standards, the SEC said.  

Zoom out 

• While several African countries have identified and pursued different routes to crypto regulations, a common motivation has been the adherence to FATF’s Recommendation 15, which relates to crypto assets.
• A FATF report that found that 97% of African countries struggle with crypto compliance.
• In addition, about 57% of the countries on the FAFT’s grey list are African.