Rwanda introduces draft regulations for cryptocurrencies

Rwanda’s Capital Markets Authority (CMA) and the National Bank of Rwanda (NBR), have announced the enforcement of a draft law to regulate virtual assets in the country.

Authorities are now asking virtual assets service providers (VASPs) in the country to apply for licenses from the CMA or risk prosecution. 

The details 

• Announcing the new regulations in a circular dated March 3, the CMA and the NBR said the draft regulations became effective the same day. 
• The two agencies have also called for public comments on the new law to be submitted before March 14, three days before a virtual consultation meeting takes place. 
• The draft placed virtual assets and VASPs under the regulatory purview of the CMA, the agency that will determine the requirements for the licensing of VASPs. 

Crypto ban still in effect

• Among other provisions, the law stated that cryptocurrencies are still not admissible as legal tender in the country. 
• In addition, crypto mining activities, crypto automated teller machines (ATMs) and VASPs providing mixing services are banned in the country. 
• The regulatory document also included guidelines for the issuance of initial coin offerings, tokenized real-world assets, and stablecoins. 
• It mandated the enforcement of the travel rule among licensed VASPs and regulators, mandating exchanges to collect and share information on individuals that transact with cryptocurrencies. 
• Operators of unlicensed VASPs in the country risk paying up to 30 million Rwandan francs ($21,000) in fines and up to five years in jail. 

Key quotes 

• The CMA’s licensing and approvals manager, Carine Twiringiyimana, told Rwandan media that a major motivation for the law’s passing was the Financial Action Task Force’s warning on the money laundering risks that crypto poses. 

“A key concern raised by the Financial Action Task Force is that virtual assets can be used as a channel for money laundering. That’s why these regulations are being introduced to mitigate such risks while also providing clear guidance to the public and virtual asset service providers.” 

Before now 

• Until now, cryptocurrencies in the country have been unregulated, with transactions involving digital currencies officially banned. 
• In 2023, the Rwandan Investigative Bureau (RIB) arrested and prosecuted a finance executive in the country for illegal currency sales, money laundering and fraud. 
• Last year, the governor of the NBR, John Rwangombwa, said the bank was working on crypto regulations that could come into effect as early as the first quarter of the year. 
• He acknowledged that the bank aimed to regulate digital assets rather than eliminate them, as their use continued to grow within Rwanda's borders.